The recent withdrawal of the Soviet Union from the U.S. wheat market sent two messages to trade officials in Washington. U.S. agriculture is no longer a low-cost producer and cannot compete in the world market even with subsidies
from the Reagan administration. The Soviets will no longer passively accept the discriminatory trade restrictions imposed on them by the United States. Instead, they will turn to less hostile, more competitive nations that view trade as a two-way street.
The Soviets' retreat from the American grain market could not have come at a more inopportune time for the U.S. economy.Once the biggest single positive contributor to the nation's trade balance, U.S. agriculture has run up the first string of monthly farm-trade deficits in nearly 20 years. The 1985 U.S. trade deficit reached a record high of $148.5 billion and is expected to go even higher in 1986. Intense foreign competition, decreased demand for U.S. farm products, and severe import restrictions imposed by Third World nations straining under huge debts to U.S. banks have all aggravated the problem.
Clearly, the United States needs to improve its competitive position, and the Soviet Union offers some unique advantages as a willing trading partner.
For over 10 years the United States has enjoyed a trade surplus with the Soviets. However, this surplus shrank in 1986 because the sharp drop in the price of oil has reduced the foreign currency available to the Soviets to buy American goods. Increased U.S.-Soviet trade has a favorable impact on U.S. employment. Economists estimate that as many as 40,000 new jobs are created by each $1 billion in increased trade. Before President Reagan imposed sanctions against the Soviet gas pipeline in 1983, Caterpillar had 80 percent of the Soviet market for heavy duty earth-moving equipment, while Komatsu of Japan had only 20 percent. As a result of the sanctions, Komatsu now has 80 percent of the market, and nearly 15,000 jobs were lost at Caterpillar. The pipeline was completed ahead of schedule.
The Soviet Union offers the United States an untapped consumer market of 280 million people as well as a highly concentrated market for large-scale industrial contracts. It also has vast reserves of hydrocarbons and energy, which make it an increasingly attractive trading partner as the U.S. supply of crude oil continues to tail off.
Critics claim that the only reason the Soviets are interested in trade with the West is to obtain American technology to achieve military superiority over the United States.
It is a myth that we have the power to deny the Soviets access to Western technology. How do the Soviets gain access to our technology, when we read of sensational cloak-and-dagger arrests in Vienna or Stockholm in which U.S. agents have caught someone in the act of buying U.S. technology to ship to the U.S.S.R.? It is virtually impossible for the United States to police the trade policies of neutral countries such as Austria, Finland, and Sweden. It is even more difficult for the United States to monitor technology shipped to the Third World. Countries such as Brazil have developed their own sophisticated technology and are anxious to make it available globally.
The Soviets are often depicted by the Pentagon as incompetent Kulaks, incapable of doing anything worthwhile, who must either buy or steal all of their technology from the West. Nothing could be further from the truth.
The National Economic Achievement Exhibition in Moscow provides impressive evidence of the Soviets' achievements in science and technology. Some of the best mathematicians and scientists in the world are Soviets. Some of the best mathematicians and scientists in the world are Soviets. The United States is already benefiting from Soviet technologies such as coal gasification, welding, electromagnetic casting, and metallurgical processes. The Soviets have state-of-the-art technology in medicine, lasers, space technology, steel making, eye films, and power engineering.
They are much better at basic research than applied research. The Americans and the Japanese are stronger in converting technology into marketable products. These differences provide a unique opportunity for scientific cooperation and joint ventures - a point which the Japanese and the West Germans have been much quicker to grasp than the Americans.
On Oct. 4, 1957, the Soviets launched the first artificial satellite, Sputnik - a shock that soon generated an enormous reaction on the part of the United States to not only catch up with the Soviets but to surpass them. Star Wars may be to the Soviet technological gap with the West, what Sputnik was to the U.S. space program in the 1960s.