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attempt to salvage any segment of the domestic shipping industry.

OCEAN RATES TO RUSSIA HOLDING UP THE WHEAT DEAL

(By Helen Delich Bentley) The American shipping industry is being buffeted from all sides in the proposed sale of wheat to the Soviets. Should the sale fall through because of the higher rates charged American-flag vessels, then the whole blame might fall on the U.S. Merchant Marine. [Latest reports are that the United States has proposed a rate compromise which the Russians are studying.-Editor.]

Even some of the American press is criticizing rate structures that threaten to disrupt the wheat deal. Foreign maritime nations are angry at President Kennedy for specifying the use of American ships. Yet American seamen's unions say that American ships must be given preference or they will picket and longshoremen might not load the foreign carriers otherwise.

Did President Kennedy deliberately risk this controversy because he truly felt the wheat should move American? The shipping industry, which has felt neglected under the present administration, would like to believe that the President himself decided that any of this wheat sold at world market prices→→→ meaning that the American taxpayer is paying a subsidy of 60 cents a bushel to the American producers-should move on American-flag ships.

But well-informed sources claim that in the initial inquiries between the two Govments, the Russians requested American-flag transport and that the President made his public statement for that reason.

If the story is true, some wonder whether the Russians didn't plan this deliberately to embarrass the White House by subsequently refusing to purchase the wheat because of the high American shipping rates. It is difficult to believe that the Russians were not aware beforehand of the higher shipping rates on American tramp ships. They have been chartering vessels for years and their shipping agencies are active enough in the world market to know all about the high American rates.

The higher rates, incidentally, do not apply to berth line services-those steamship lines serving on regular trade routes with a steady service-because of the conference systems under which both foreign and American operators charge identical rates and institute identical practices on those routes.

But grain moves on tramp ships primarily, as do most bulk cargoes. The liner services most of which are subsidized or about to be-would be available only to move parcel lots of wheat on their regular run. This they might be able to do at a slightly lower rate than the tramp ships, but only if they happen to have some empty space on a ship that is sailing near or to Russia.

The Government-aid grain which has been moving around the world to India, Poland, Yugoslavia, Great Britain, France, Germany, Algeria, and other countries since the Marshall Plan was first instituted is transported primarily on regular tramp ships or on liners chartered to a tramp operator. The Cargo Preference Act requires that at least 50 percent of any Government-financed cargo shall move on American-flag ships, if available at fair and reasonable rates.

Those fair and reasonable rates are determined according to guidelines established by the Maritime Administration of the Department of Commerce. Although the guidelines are in theory never made public, the industry learns of them somehow so its operators may know what to charge for a cargo fixed (contracted) for a specific country. Any rate equal to or less than the guideline means that an American ship is available at a fair and reasonable rate. If the rate

is higher, the Maritime Administration rules that an American ship is not available. The American rates have ranged from $7 to $10 higher than the foreign freight rates for several years. Therefore, there is nothing new about them and no reason for a sudden gust of sympathy for the Russians because they may have to pay more to move wheat which they claim they so desperately need.

The Department of Agriculture has been unhappy about the Cargo Preference Act since it was passed in 1954 and has been caught repeatedly trying to skirt it by favoring foreign ships. More than once the Department of Justice has had to issue directives to Agriculture that it favor Americans where the Cargo Preference Act is applicable.

It is certainly true under the Kennedy administration that more Government agencies are using American ships almost exclusively whenever and wherever they can. But there is still a great deal to be done to indoctrinate both the Departments of Agriculture and of State to think of Americanflag shipping first.

The Cargo Preference Act is the only protection that the American Merchant Marine has. Today, less than 10 percent of all of the U.S. imports and exports move on American-flag ships. The Norwegians lead the foreign nations in the amount of American foreign trade transported and yet the Norwegians were the first to blast President Kennedy for his suggestion that the subsidized American wheat should move preferably on American ships.

Other countries which have raised questions or registered indignation over "preference" to American ships are Japan, Denmark, Sweden, Italy, Greece, the Netherlands, and Great Britain.

Luther H. Hodges, Secretary of Commerce, defended President Kennedy's stand by pointing out that foreign nations would arbitrarily designate their own ships (and have done so) to carry such cargoes without consideration for anyone else. Secretary Hodges indicated that was the position the United States should adopt on the Russian wheat movements.

Despite all of the hullabaloo, no one really knows what the American rates actually will be until a fixture-contract-has been made for a ship. Until that time, no one can determine whether the American rate will fall within the "fair and reasonable" category.

The factors involved in determining a rate are numerous: How many tons a ship can carry, the port of loading, the port of discharge, the facilities available for discharge, the length of the voyage, the speed of the ship. All of these are cost factors. A larger and faster ship can quote a much lower rate because it could carry several times as much as a 10-knot Liberty. For instance, the 106,000-deadweight-ton tanker Manhattan recently picked up aid grain for the Middle East for about $12.80, while a Liberty ship quoted $24.50.

A group of tramp ship operators did announce last week that they would make sufficient tonnage available at $21 a ton to transport 1 million tons of wheat to Russia before next summer. This, presumably, was a drop of $5 a ton from what they say is the comparable rate on aid cargoes to nearby points. However, it still ranges from $5 to $8 a ton higher than quoted foreign rates.

An interesting development, however, is the climb in foreign rates since the big wheat movements from Canada and Australia were announced. The indices show rates rising from $3 to $5 a ton in the world market with indications they will go still higher. History has shown that whenever American ships were not available to steady them, the foreign rates climbed to abnormal levels. One prognosticator last week mused that "before this grain rush is over, both American and foreign rates will be $33." Nothing would

please the shipowners, who have been in recession since 1957, more.

The $21 figure released by the tramp shipowners may serve as a guide to the "guideline" which the Maritime Administration is to determine soon.

It is interesting that no directive or indication has been made that any grain other than wheat is to be channeled to American ships.

Moreover, wheat moving to other Communist bloc nations purportedly can move on ships of any flag. So the big question centers around an estimated 4 million tons of wheat and wheat flour that the Russians allegedly want for themselves. Will the transaction be consummated and will the wheat move on American vessels?

THE COLLAPSING CONTROLS ON EAST-WEST
TRADE

[From the Washington (D.C.) Star,
Mar. 24, 1963]

BRITAIN SEEKS RED CHINA AND SOVIET TRADE—
CONTROVERSY SEEN IN WEST'S CAPITALS OVER
CONTRACTS

LONDON, March 23.-The British Government, plagued by export difficulties and high unemployment, is quietly setting the stage for important new business deals with Russia and Red China.

Two big contracts with the Russians were reported under study. Each seems certain to heighten controversy in Western capitals. They are:

1. The Board of Trade has advised the South Durham Steel & Iron Co. it is free to sell oil pipe to the Russians. The $225 million Middlesborough firm has been losing money lately. It hopes to pick up orders for pipeline equipment which West German companies have had to cancel as a result of a Government embargo. Britain's refusal to join in a general Atlantic alliance embargo of steel pipe sales to Russia has been criticized in Bonn and Washington.

2. The British Cabinet is also considering a Moscow offer to sell Britain up to 2 million tons of Soviet oil a year.

As bait, the Russians have indicated they will place orders with the hard-pressed British shipbuilding industry.

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Mr. Lu and his mission will be visiting an aircraft factory which is building six jet airliners for delivery to China, a nuclear power station, electronic and power generating plants and a variety of other industrial centers. The British are hoping to interest him in buying complete factory installations, machine tools, and consumer goods and equipment.

[From the New York Times, May 31, 1963] SOVIET PRESSES BONN FOR MORE TRADE; SEEKS PACT BYPASSING COMMON MARKET DEADLINE

(By Arthur J. Olsen)

BONN, May 29.-Premier Khrushchev has suggested a 3-year renewal and expansion of the Soviet Union's $400 million a year trade agreement with West Germany.

The suggestion was made to a West German industrialist, Berthold Beitz, in Moscow last week. It appears to fit a pattern of developing Soviet interest in economic ties with West Germany. It also promises to confront Bonn with a difficult decision on its future trade policy with eastern countries.

Under the treaty setting up the European Common Market, all trade agreements with countries outside the trade bloc are to be negotiated by the Common Market as a whole after January 1, 1966.

The 3-year agreement sought by Mr. Khrushchev would run through 1966. Bonn therefore would have to insist on short-term renewal of the Soviet agreement that expires this year or ask the Common Market executive for an exception to the 1966 cutoff date.

BLOC NATIONS ARE WARY

There is considerable sentiment in government and industry for expansion of West Germany's commerce with Soviet-bloc countries. Bonn is far from sure of similar enthusiasm among its Common Market partners, some of whom compete with East European countries in exports to West Germany.

Soviet pressure for a 3-year renewal is sure to be heavy, Communist governments, which plan their economies on a long-term basis, insist wherever possible on 3-year or 5-year agreements. Short-term trade protocols are invariably limited in scope and size.

Premier Khrushchev is understood to have impressed Mr. Beitz, who is general manager of the Krupp industrial enterprise, with Moscow's interest in broadened commercial exchange with West Germany. This is a recurrent theme in Soviet propaganda aimed at Bonn.

WEST BERLIN AN ISSUE

A parallel theme, now worrying West German officials, is a current Soviet effort to cultivate commercial relations with West Berlin. The purpose apparently is to develop the position of West Berlin as a foreign-trade partner separate from West Germany.

When the Bonn regime and the Soviet Union negotiated their current trade agreement in 1960, Soviet authorities refused to recognize Bonn as representing West Berlin's commercial interests.

Officials here are uncertain whether Moscow will resume its effort to cut Berlin off from the Federal Republic as far as Soviet trade is concerned. The one recent hint of Soviet policy was ambiguous.

In an invitation to West Germany to exhibit at a Moscow trade fair next year, the Soviet Union invited specifically West Berlin's participation. Berlin officials are now trying to discover whether the Soviet Union meant that West Berlin should appear as a separate country.

This interpretation could well be correct, since the Soviet Embassy in East Berlin has recently been trying to interest West Berlin businessmen in Soviet trade. The effort, which included a conference with about 50 West Berlin executives last month, has won limited response because few Soviet export products are useful to West Berlin.

SOVIET VIEW OF FUTURE

In his talk with Mr. Beitz, Premier Khrushchev appears to have tried hard to encourage the present interest of West Berlin's industrialists in expanded commerce with the East. Officials here believe the Soviet leader may well have been expecting that a new government in Bonn might become more receptive to Soviet political approaches than the regime of Chancellor Adenauer has been.

Premier Khrushchev is understood to have questioned Mr. Beitz closely on the probable character of the government to be organized by Vice Chancellor Ludwig Erhard when he succeeds to the leadership in October. The Premier apparently did not ask the industrialist to convey an invitation for Mr. Erhard to visit Moscow, as was rumored in the West German press.

Mr. Beitz's report will be a principal contribution to a conference next month on Eastern trade policy to which West German industry leaders have been summoned.

Mr. Erhard, Foreign Minister Gerhard Schröder and possibly Chancellor Adenauer will hear recommendations and arguments of industry. It is expected to advocate trade expansion with the East and pressure on the Common Market for concessions that would make that expansion possible.

West Germany's trade with the Communist bloc has risen by 25 percent since 1958, although it remains comparatively small. Last year it amounted to slightly more than $1 billion, or 4 percent of total West German foreign trade. Of the East bloc trade, the Soviet Union accounted for $400 million.

[From the New York Times, Aug. 22, 1963] JAPAN MILL SALE HAS WIDE IMPACT-TOKYO TO REASSURE ALLIES ON RED CHINA DEAL (By Emerson Chapin)

TOKYO, August 21.-Japan was reported eager today to reassure its allies that the sale of a multimillion-dollar synthetic textile plant to Communist China had no political implications.

As the long wait began here for world reaction to the deal with China, Japanese Government sources stressed that the arrangement did not constitute any form of "economic aid" to Peiping and asserted that Japan was merely following international business practice.

The Government was said to be anxious to reassure its allies, particularly the United States and Nationalist China, that the deal was strictly commercial.

Fears of adverse reaction in the United States are thought to have been responsible for the Government's long delay in approving the sale of the $20 million plant to produce vinylon. Under the terms finally approved, the Chinese will make a downpayment of 25 percent and pay the balance over 5 years at 6-percent interest.

Vinylon, also known as vinal, is a polyvinyl alcohol fiber developed by the Japanese and not generally used in the United States. The low-cost fiber can be produced in regular filament and staple form as well as in water-soluble form. It is strong and abrasion-resistant and has relatively low elonga

tion.

The Japanese Government imposed on the Kurashiki Rayon Co., which is selling the plant, what was generally regarded as a facesaving condition.

The rate of interest was raised from the 42 percent originally specified to 6 percent so Japan could not be accused of granting more favorable payment terms to China than nations. are offered by any of the Western trading But the price was reduced from 7,400 million yen ($20,555,555) to $7,200 million yen ($20 million), so that the total amount paid by China would not be altered.

U.S. VIEW OUTLINED There was no public reaction from the U.S. Embassy. American officials here take

the view that Japan cannot be criticized for seeking trade with Peiping on the same terms as such other countries as Britain, Australia, and Canada.

It was noted that a British trade group had just returned from Peiping with predictions of a rapid expansion in trade between the two countries.

Statistics show that Japan has been falling behind Western competitors in exports of machinery and plant equipment largely because of the 20- to 30-percent downpayment requirements imposed by the Government.

The United States has looked askance on the Japanese assertion that the sale to China is simply a business arrangement and has no political significance.

American officials have observed that in dealings with Peiping, economics and politics cannot be separated, and have reminded the Japanese of what happened in 1958, when the Chinese suddenly seized on a political pretext to break off all commerce.

The U.S. view is that the Japanese, in making such manufacturing plants available for deferred payment, would be better advised to consider the underdeveloped countries of southeast Asia, where the need is great and the future of commercial relationships could be more promising.

CONCESSIONS SOUGHT

In announcing the Government decision yesterday, Hajime Fukuda, Minister of International Trade and Industry, declared that the extent of future contracts for plant sales to Communist countries on easy payment terms would be limited by the amount of funds available in the Japan Import Bank. However, U.S. officials believe that the Government, having said "Yes" to Kurashiki Rayon, may find it difficult politically to turn down other applicants.

A number of new applications by textile and chemical fertilizer concerns are expected in the wake of yesterday's decision.

[From Metalworking News, Oct. 14, 1963] TOOLBUILDERS IN UNITED STATES GENERALLY ENDORSE TRADE WITH RUSSIANS

A general tendency among machine tool builders to favor selling their wares to Russia emerged last week in a Metalworking News spot check around the country.

In the wake of the administration's decision to sell wheat to the U.S.S.R., many toolcompany chief executives showed varying degrees of interest in the idea of such trade for themselves. At the same time, a substantial minority of those checked flatly opposed dealing with Russia.

Most tool executives favoring U.S.S.R. trade made it conditional on Government approval, and many would specifically exclude sales of machinery directly useful in war production. Others excluded any tools not already available to Russia from other sources.

The fact that equipment is being made available to Russia by America's allies was pointed out repeatedly.

Builders opposed to Russian trade tended for the most part to question the wisdom of building up the strength of a potential enemy. A few shrank from trading with Russia, however, on the basis of bad experience in prior transactions.

Following are detailed reports from major toolbuilding centers:

SHOULD ALLOW IT Cleveland: American machine tool builders should be allowed to sell to Russia.

That was the unanimous opinion of machine tool builders here last week in the wake of the decision to allow the sale of wheat to Russia.

None of the builders were willing to be quoted for the record, however, and several recommended restrictions.

Machine tools that can be quickly converted to making of weapons such as artil

lery shells should be barred, said one builder. He admitted that all machine tools indirectly would help in making military equipment, but added that so would wheat and proposed the banning of only those machines that would directly turn out munitions.

Another builder would allow the sale only of machine tools the Soviet Union can now purchase from other countries. He also said that if the Government wants to ban these machines, the industry should be willing to go along.

"If we don't sell the machine tools to Russia, then Great Britain, West Germany, France, and other countries will. What's the difference between wheat and machine tools?" That was the consensus.

One builder claimed Iron Curtain countries are now copying American machine tools and paying no attention whatsoever to patent rights, except to restrict sale of these tools to other Iron Curtain countries. MIGHT AS WELL, TOO

Rockford, Ill.: The United States might as well sell machine tools to Soviet bloc nations if those nations can buy them from our allies. Chester J. Braatz, president of

Barber-Colman Co., here, said last week: "We accomplish nothing if we deprive ourselves of this business," he stated.

Mr. Braatz stressed that this is his personal view and is restricted to equipment the Soviet "can buy from someone else if they can't get it from us." He said he does not feel the United States should promote sale of machine tools to the Soviet.

Clayton Gaylord, president of Ingersoll Milling Machine Co. here, noted that anything we sell to the Russians aids their ability to wage war on this country. There is no point in distinguishing between wheat and machine tools, he added.

Mr. Gaylord said the decision as to

whether to trade with the Soviets should be made by the "people planning the strategy of the cold war and in a position to estimate the possibility of a hot war."

Philip Mattison, president of Mattison Machine Works, here, stated his strong personal opposition to selling to the Soviets.

"If we had an inquiry right now, and it were legal, we would not quote," he said.

Still another local builder, who prefers to remain unidentified, said "we'd sell to anyone else first." This builder had done business with Russia's Amtorg Trading Corp. at one time and he recalls it as the "toughest kind of business. Their arguments over tolerances were intolerable."

OPINION DIVIDED

Cincinnati: Test-ban treaties and sale of wheat all signs of growing, yet limited U.S. cooperation with the Soviet Union have not brought about a major realinement of thinking on trade with Russia among machine tool builders here.

Earlier attitudes, on both sides of the issue, continue to prevail.

Graham A. Marx, president, G. A. Gray Co., said, "We are not eager to deal with the Russians," while Frank Fields, president, Fosdick Machine Tool Co., said, "I feel that machine tool sales to Russia are certainly justified. There is nothing we build that the Russians can't get from our European allies."

A more middle-of-the-road statement was offered by William Dolle, Sr., president of Lodge & Shipley Co.: "If we would get Governmental approval on trade with Russia, there would be no objection to taking orders but Government opinion wil govern our attitude."

It was commonly felt that the wheat-sale agreement would spark industrywide consideration of lifting the Communist-Bloc trade barrier.

Restricting some machine tool types from possible trade was seen as advisable by many builders here. Excluding machines directly

related to production of military items or those of unique technology was suggested.

In considering the eventuality of future trade, local machine tool management felt that trade negotiations should be begun and carried on by the individual firm rather than through governmental or industrywide groups.

ISSUE TOO COMPLEX

Providence: Henry D. Sharpe, Jr., president of Brown & Sharpe Manufacturing Co., here, feels the question of machine tool trade with Russia is too complex to be answered with a simple yes or no.

"You would have to have a specific proposition to consider before you could evaluate it," he said, adding that the interest of the United States weighs heavier than the interest of any one manufacturer.

CHICAGO SEES VALUE

Chicago: Machine tool executives here generally favor a review of U.S. machine tool trade restrictions with the Soviet Union.

Several say they cannot understand why the United States does not sell the Russians machine tools when our Allies make such

He added that NMTBA knows of no members who had applied for an export license to sell to the Soviets.

Under the Export Control Act, only manually operated bench and floor tools can be licensed for sale to Russia.

[From the Baltimore Sun, Sept. 25, 1963] HODGES FAVORS RED BLOC TRADE-ADMINISTRATION IS CONSIDERING CHANGE IN POLICY (MINNEAPOLIS, September 24.-A team of American private grain traders is negotiating with a Soviet commission now in Canada for a huge sale of this country's wheat to the Russians.

The Minneapolis Tribune and Des Moines Register said in a copyrighted story tonight that approval of the U.S. Government was all that remained before a deal could be closed.)

(By William Knighton, Jr.) WASHINGTON, September 24.-Luther H. Hodges, Secretary of Commerce, today said he supports the move to expand trade in consumer goods goods with Communist bloc countries.

A change in the present governmental sales. One builder, while favoring a review, policy banning the sale of not only mili

Communist world

said he does not think we should sell the world sophisticated machine tools such as numerically-controlled items, though he saw no objection to selling con

ventional machines.

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"The Russians are getting what they want anyway from Europe, and we might as well cash in," he added.

A similar point of view was voiced by Norman L. Parker, vice president, Parker-Majestic, Inc., here. He favored sales to the Soviet Union, but not sale of machinery that might be converted to military applications.

WORTH THINKING ABOUT

Windsor, Vt.: The prospect of trade with Russia is worth thinking about to J. A. Kiely, vice president and assistant general manager of PneumoDynamic Corp.'s Cone Automatic Division, here.

"I think that, if we were permitted to by the Government, we'd be inclined to consider the business," he said. "Both English and German manufacturers are interested in the

business, and there's no reason why we

shouldn't be."

A FINE THING

Bridgeton, N.J.: Trade, even with an enemy, is "a fine thing," in the opinion of George E. Bass, president of Ferracute Machine Co., here.

[From the Metalworking News, Oct. 14, 1963]

TOOLS ISSUE SIDESTEPPED BY NMTBA WASHINGTON.-The National Machine Tool Builders' Association has taken no stand regarding the sale of U.S. tools to the Soviet Union and will leave the decision "up to the Government."

The Commerce Department's Office of Export Control is "considering" a reexamination of the Export Control Act, which now severely limits the sale of equipment to the U.S.S.R., a spokesman said. He made it clear that no firm decision to reexamine the act has been made.

An NMTBA spokesman said that if the Government decides to permit the sale of socalled strategic tools to the Soviet Union, the association probably will advise against it.

tary goods, but also those of economic value, to the Communists is now under very definite consideration by the administration, he told a news conference.

He said he had not yet formally made any specific recommendations on the issue to the President, but his own feelings on this could be summed up in his statement: "I favor selling goods."

He quickly emphasized that "strategic materials are completely out."

CANADA SELLING WHEAT

Hodges has been designated by the President to lead a drive to increase the sale of if accomplished, would make a sizable dent American goods abroad by 10 percent, which, in the present imbalance in U.S. international payments.

Further, a White House conference on export expansion last week recommended that this Government take another look at its policy on trade with Russia and other members of the Red block, but it did not specifically call for a change.

Also, the recent announcement that Canada had signed a contract for the sale of $500 million in wheat this year to the Soviet has greatly enhanced the possibility that the United States will liberalize its present policy.

A new policy on the sale of foodstuffs could be agreed to relatively speedily, and Hodges indicated he thought an announcement liberalizing current policy against the export of such goods to Russia and the other members of the Eastern bloc might come in about 30 days.

A decision on the sale of other consumer goods probably would take longer to be reached, he said, for our allies would have to be consulted in this respect.

"Maybe, we have not been as practical" as we might have been regarding East-West trade, the Commerce Secretary said.

A number of consumer items could be placed on the export list without congressional action, he pointed out.

He also said, in answer to a question, he expected that Russia would want to purchase from this country a great many items worth considerably more than the products America would want from the Soviet.

This, of course, he noted, would give the United States a favorable balance of trade. But it would not be necessary for America to balance its trade with the East bloc, he said, pointing out that the overall trade balances are figured out on a world-wide basis.

In answer to a question, he said a shift of policy would not interfere with aims to isclate Cuba from trading with the rest of the world. The new policy toward each country

would be considered on an individual basis, nounced that it would sell 300,000 tons of the he said.

grain to Russia for $11 million. Earlier it had Hodges answered two unrelated questions sold $6,800,000 worth of wheat to Poland. in this fashion:

1. He has no plans to leave the Cabinet and again be a candidate for Governor of his native North Carolina.

2. Business prospects for the remainder of the year are good.

[From the New York Times, Sept. 9, 1963] CANADA SEEN WIDENING TRADE WITH THE COMMUNIST COUNTRIES

(By Philip Shabecoff) Some recent rumblings have been heard to the north that may herald an expansion of trade between Canada and the Communist nations. Aside from promoting wheat sales to China, the Canadian Government has played a relatively passive role in trade with the Communist bloc.

In the last few weeks. however, there have been several indications that the Government will actively press for increased EastWest trade.

Greeting a Soviet negotiating team that arrived at Ottawa last week to renew a trade agreement with Canada that expired last week, Canada's Trade Minister, Mitchell Sharp, expressed the hope that "a mutually satisfactory basis could be found for the continuation of the trade agreement and the expansion of trade between the two countries."

TRADE EMPHASIZED

Paul Martin, the Dominion's Minister of External Affairs, said in a recent speech that the limited nuclear test ban treaty should be followed up with other contacts with the Communist countries, including China. He emphasized the expansion of trade as an important contact.

Perhaps most significant was Canada's agreement to admit $7 million worth of competitive goods from China-mostly textilesas part of the deal in which she will sell 187 million bushels of wheat to the Chinese over the next 3 years. This clause was admitted to the contract despite the angry protests of Canada's textile industry.

It has been widely conceded that Canada, which consistently maintains a heavy surplus of exports over imports in trade with the Communist nations, could not substantially expand these exports unless it admits more Communist goods. The willingness of the Government to accept Chinese textiles would seem to indicate that Canada would import competitive products to accelerate exports to the Communist nations.

În 1962, Canada's exports to the Communist nations totaled $208,028,000 in Canadian funds. Considering Canada's economy and size, this compares very favorably with U.S. exports of about $288 million to the same countries.

WHEAT IS EXPORTED

Over half of Canada's sales to the Communists-some $147 million-went to China, which is blacklisted by the United States. Exports to the Soviet Union and most Eastern European nations dropped sharply last year because of reduced sales of agricultural products.

Exports to Russia fell to $3,297,000 in 1962 from $24,276,000 the preceding year, according to the Dominion Bureau of Statistics. These exports representing widely scattered product categories, the largest of which were cattle hides, tractors, and plastics and synthetic fibers.

Poland remained the largest customer for Canadian goods with imports of $37,449,000 last year. Poland imported some wheat but the largest dollar volume was accounted for by synthetic fibers.

This year, however, the Soviet bloc is again loading its shopping cart with Canadian wheat. On August 30 the Government an

Canadian imports from the Communist countries have been relatively small. In 1962 she imported only $24,223,000 from these nations, over a third of which-surprisinglycame from Czechoslovakia.

If the agreement to admit Chinese textiles indicates a trend, and several trade sources believe that it does, then Canadian imports from the Communist countries can be expected to grow appreciably in the near future.

There are, however, several built-in barriers that probably will put a limit on the expansion of Canada's trade with the Communist areas.

In the first place, Canada requires that its exporters refrain from shipping strategic materials to the Communist bloc. Like most Western nations Canada uses a looser definition of "strategic materials" than the United States but finds itself tied willy-nilly to the American definition because of its economic ties with this country.

RESTRICTIONS NOTED

Many Canadian companies are subsidiaries and affiliates of U.S. concerns, and thus cannot ship products that are prohibited to the Communist nations by American law. Moreover, many Canadian manufactures are made under U.S. patents, and these, too, cannot be exported to the Communist nations.

Former Prime Minister John Diefenbaker commented some time ago that Canada does not share the views of some countries (meaning, presumably, the United States) that argue against trading with Communist countries. However, in many instances Canadian exporters have no choice but to follow American views on the subject.

In the case of the Soviet Union, Canada's trade potential is somewhat limited by a similar raw materials capacity. A Canadian trade official commented recently that "we send wheat to Russia and she sends furs to us. This is carrying coals to Newcastle."

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Purpose of the 10-man mission was to explore trade expansion with the United Kingdom, according to Metody Simeonov Popov, president of the Bulgarian Chamber of Commerce and leader of the mission. He noted that Bulgaria, usually considered an agricultural country, has stepped up machine tool production since World War II. Bulgaria is now emphasizing the manufacture of metal cutting machinery, Mr. Popov said.

The mission, which visited British machine tool plants, expects purchasing agreements will be reached after it reports to the Bulgarian Government, it was said.

Emil Mindov, general director, Machineoimport, Bulgaria, said the mission was impressed with the workmanship of British machine tools, but he thought they lacked the efficiency needed for Bulgarian production. He said he did not see multipurpose machine tools for mass production such as models known to be manufactured in the United States.

Last year, foreign trade represented onehalf of the country's national income, Mr. Popov said. Bulgarian exports and imports each totaled about $900 million, but only 20 percent represented machinery, he added.

TO SEEK INCREASE

Mr. Mindov noted that Bulgaria is importing $20 million worth of machine tools

this year and wants to increase this figure. At present only 20 percent of Bulgaria's total trade is outside the Eastern bloc, he said. The delegates noted that Bulgaria would like to expand trade with Western nations, including the United States.

Bulgaria currently makes general purpose lathes, milling, shaping, and drilling machines; and will soon begin production of a multipurpose miller-borer. However, the

delegates noted that the country needs more specialized equipment for mass production, and also requires gear and thread grinding machines.

[From U.S. News & World Report, June 17, 1963]

Another result of the battle for markets is a growing European interest in trade with Communist countries. There is to be a "Khrushchev round" of trade talks next year under United Nations sponsorship. Moves to expand East-West trade are already well advanced.

West Germany has a new trade treaty with Poland, negotiates another with Hungary. The general manager of Krupp, German industrial giant, pays a visit to Moscow, comes back with plans for selling Russia $12.5 million chemical plant. Kiel shipyards hope for a Russian order for trawlers.

Trade groups shuttle back and forth between Britain and Russia all the time. Russia signs up to buy $70 million worth of British equipment for a plastics plant. Britain ships more steel in Russia this year, mulls larger purchases of Russian grain, iron ore and wood products.

Sweden nails down big Russian order for 10 refrigerator ships and 2 floating docks, is expected to take more Soviet oil in return. Austria shows interest in expanding trade with Poland.

Red China plans purchases of European industrial materials and machinery.

Communist world clearly believes the time has come when Western nations will gladly sell all sorts of things the Communists need to keep their economic plans from slipping too badly.

Meanwhile, trade problems cause friction inside the Soviet bloc, just as they do among Western Allies. Moscow's plans for industrial integration of Eastern Europe run into opposition. Satellites are unwilling to shelve plans for broad-based national development, do not want to specialize on just those products the Russians think they ought to produce. Pressure grows in Eastern Europe for some kind of deal with the Common Market.

[From the Christian Science Monitor, May 1, 1963]

BRITISH SELL ENTIRE INDUSTRY

(By John Allan May)

LONDON.-A development of some importance is seen to lie behind the news that two British firms have signed contracts worth £26 million ($72,800,000) with the Soviet Union for the supply of six complete chemical plants.

The Soviet Union is here trading out of need rather than out of political guile.

It is in a sense buying its way out of failures in Soviet planning. These, in an age of sputniks and widening horizons of thought, become at once more obvious and less bearable than before.

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ing material. They are to be completed here before the end of 1966.

It is noted that this time there is no oil blackmail about the deal, no making the provision of employment in British heavy industry dependent on British Government agreement to buy Soviet oil the country does not really need.

DAILY WORKER QUOTED

The Daily Worker on Tuesday again mentioned the supposedly great advantages of buying Soviet oil but not until the 14th paragraph of its front-page article and then without great conviction.

The Worker also stated that "this deal was concluded in 4 weeks." However, Leslie Dobson, joint managing director of SimonCarves, has put the actual period of negotiation at 6 years.

For the British there are also interesting implications in the deal.

The contracts were won in the face of very strong competition from West Germany. That Britain won the contest is credited to these facts: British engineering is certainly as good as German, British prices by now are keener, and the British process of producing polythene, developed by Imperial Chemical Industries, is the best in the world.

Credit facilities for the contracts are being provided by Lazard Bothers, with a group of other London bankers.

TRADE SURPLUS

Two of the plants to be supplied by SimonCarves are to have an annual capacity of 48,000 tons and two a capacity of 24,000 tons.

Total British exports to the Soviet Union have been running at the rate of £55 million a year in the recent past and British imports at about £85 million.

The Soviets have usually used the consequent surplus to buy raw materials in the overseas sterling area. It could be that in future there will be less need for those materials and more for machinery, which would redound to Britain's trading advantage without requiring extra imports of Soviet goods.

[From the Baltimore Sun, June 14, 1963] RUSSIA EYES BIG PURCHASE FROM BRITAINWANTS TO BUY OIL REFINERY AT COST OF $300 MILLION

Moscow, June 13.-The Soviet Union wants to buy an oil refinery costing almost $300 million from Britain.

If the project goes through, it alone will amount to more than twice Britain's current annual exports to Russia.

News of the Soviet interest in a refinery was given to Harold Wilson, British Labor Party leader today by Nikolai Patolichev, Soviet Foreign Trade Minister.

Some observers believed the disclosure was made to Wilson, rather than to one of the officials of the ruling Conservative Party who have been here in recent weeks, in an effort to boost the Laborites' chances in the next British election.

Wilson clearly is using his trip here for campaigning, tying in cracks at the Conservatives with many of the developments during his visit.

He talked with Patolichev, Mikhail A. Suslov, Soviet Party Presidium member and secretary, and Anastas I. Mikoyan, First Deputy Premier, in a busy day.

Wilson said Mikoyan, who has been ill with kidney trouble for several weeks, looked fairly fit but not yet fully ready to resume his official duties. He saw him at Mikoyan's dacha outside the capital.

The Labor Party leader said he did not think construction of a refinery for Russia would conflict with British obligations not to sell embargoed strategic goods to Communist nations.

NO DETAILS GIVEN

The informal Soviet proposal was not tied by Patolichev to British imports of Soviet oil, Wilson said. No details of whether the sale might be for cash or credits were discussed.

Wilson said he discovered that Russia offered some $40 million worth of oil in exchange for a similar amount of British-built shipping in 1961, and the proposal was turned down by the British.

There is no doubt that a considerable

amount of the unemployment in British shipyards would have been prevented if the offer had been accepted, he said.

He stated that while it is not the Labor Party's policy to increase British imports of Soviet oil at the expense of British coal, he did believe that more Soviet oil could have been consumed as the over-all use of oil in Britain increased.

Russia apparently has no current oil surplus but is ready to talk about a straight oil-for-ships deal, taking from British yards trawlers, freighters, and refrigerator vessels.

They also will offer Britain a quantity of oil in exchange for items on a list including chemical plants, plastics, fibers, cellulose and paper, Wilson said.

His party would consider forming a consortium of firms to meet such Soviet orders if they materialize, he stated. One firm is not likely to be able to handle such orders. Wilson had lunch with Soviet journalists today, answering questions for about an hour afterward. American correspondents have been barred from his press conferences so far. Another conference, to which they may be admitted, will be held tomorrow after he talks to Premier Khrushchev a second time. He leaves for Warsaw for talks with the Polish party leader, Wladyslaw Gomulka, Saturday.

THE SOVIET AGRICULTURAL CRISIS

[From the Washington Post, Oct. 25, 1963] CATTLE KILLING IN SOVIET GIVES HINT OF PANIC

(By Victor Zorza)

LONDON, October 24.-Reports in Soviet papers today that farmers were slaughtering cattle for lack of fodder give to the Soviet food situation the air of panic which Premier Nikita Khrushchev has tried to prevent by his purchase of foreign grain supplies.

The unauthorized slaughter of cattle is a traditional danger signal in the Russian countryside. It has accompanied every agricultural crisis since the 1917 Revolution, through the great famine and collectivization in the thirties, to the postwar disasters under Stalin.

An account in the newspaper "Soviet Russia" today pictured lines of lorries filled with cattle waiting in front of slaughterhouses in the Kursk area. The lorries had come from collective farms "trying to get rid of the cattle," said the paper.

The newspaper quoted farmers as saying they had no fodder to feed the livestock.

The paper said that serious apprehension was caused by farmers who were sending cattle to slaughterhouses prematurely, even though they had enough fodder.

The first indications of food shortages in Russia began a few weeks ago with reports of farmers buying up bread to feed cattle. A newly disclosed shortage of potatoes has added to the difficulties.

In one sense the trouble can be said to have begun with the very cattle that are now being slaughtered. In the middle of last year, Khrushchev decreed a considerable increase in the prices to be paid to the farms for milk and meat. The selling prices in the shops were also raised, but it was promised that over the longer term the new policy would bring more meat to the market.

The farms responded very handsomely, so much so that the cattle population explo

sion also burned up considerable amounts of grain and feeding stuff much faster than they were being produced.

It is estimated that the additional requirements of grain may amount to something like 5 million tons.

To this must be added the disappointments of this year's harvest, whose marketable grain target had originally been set at 65.5 million tons, was then raised to a minimum of 69 and a possible maximum of 74 million tons, and is now put by Soviet sources at something like 45.6 million tons. This is 10 million tons less than was procured last year. In the meantime the cows and pigs and bullocks whose appetites may have started it all are beginning to be killed off before the extra feeding stuff procured by the government abroad has a chance of arriving, presumably because the Russian peasant knows from long experience that there will never be enough, and that it is better to slaughter the cattle while there is still meat on them, rather than wait until they starve to death.

[From the Christian Science Monitor, Sept. 25, 1963]

SOVIET CITIZENS ASKED TO TIGHTEN BELTS Moscow. Soviet citizens, who doubtless eat more bread than any other single food, are being told at private meetings and in the press to ease an acute shortage by getting along with less.

Local leaders are being warned that bread must be saved and that prices may be raised.

Despite these warnings there appears no great probability that any Soviet citizen will go seriously short of bread.

Emergency wheat purchases abroad, running about 7 million tons, will offset crop losses during the past year due to drought and persistent mismanagement of planting and harvesting. The loss apparently is about 10 percent of the crop, which last year was 65 million tons.

The shortage and the bad harvesting have sent Premier Nikita S. Khrushchev storming about the country denouncing careless farming methods.

And again one of his pet projects, the virgin lands in Siberia and Southwest Asia, has let him down as it did in other recent years.

Harvesting in the Kazakhstan virgin-land area is so far behind schedule that it seems inevitable much grain will rot in the fields and some will be buried under the snow.

While Soviet citizens may not go short of bread, the shortage of wheat and corn as well seems certain to make them short of meat again this year.

In the Kuban, the Soviet Union's best farm area, a bumper crop of wheat was harvested there before the drought set in during July and August.

TRACTORS INOPERABLE

But the drought hurt the corn badly as well as vegetables and fruit. Villages and towns in the area are short of vegetables. This is reflected also in Moscow and other cities. In the capital, queues form every time a shop displays any fresh vegetables.

Grain was lost in the virgin lands last year because thousands of combines and tractors lay idle in the fields for lack of spare parts. And as early as August 28, Selskaya Zhizn (Farm Life) reported that some farms had not finished the repair of harvesting machines and combines before the beginning of this year's harvest.

In some areas only 20 percent of the machinery was used. In the Irkutsk area of eastern Siberia, the paper said, "Peas started to fall out of the pods while drivers were still testing their machines."

One big state farm in that area was awaiting the delivery of 100 combines from Rostov, in European Russia, because the farm's own machines lacked belts or batteries.

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