Business: Lift the Embargo?

To West Germany’s most important postwar trade show swarmed 100,000 buyers from 74 countries. The most conspicuous visitors to the Hannover Industry Fair last week were 70 Russians, the biggest group of top Russian technical experts ever to visit West Germany, who hungrily eyed the finely tooled Ruhr machines and spread the Lorelei song for more East-West trade. Never before were the Red traders so active and abundant. Poland sent 200 engineers; Red China dispatched 30 stonefaced, baggy-trousered representatives to drum up business.

German response was warm. The powerful Federation of Germany Industries treated the Russians to a private reception. Said Krupp’s General Manager Berthold Beitz: “I am a businessman, so what do I care about politics? Let Adenauer see to politics, and let him leave me do my job. All embargo lists should be abolished immediately.”

Though few German businessmen were as extreme as Beitz, almost none said that they were opposed to the trade pact with Moscow that the Russians want but that Chancellor Adenauer has stalled. The Russians missed few chances to exploit this business-is-business attitude, told German businessmen that Russia soon will propose a giant East-West trade program.

More Sales? The Germans were not alone in their demands for an easing of restrictions on trade with the Red bloc. Britain and Japan want to pare down the lengthy list of goods prohibited to Red China, allow it to buy the same Western nonstrategic items that Russia does, e.g., chemicals, electrical goods, tractors. They argue that cutting off Red China from the West drives it closer to Russia, that anyhow Red China gets certain embargoed Western items through Russia.

Reluctantly, Washington was bending under the pressure. Last week the parties to the embargo—upheld by all NATO nations (except Iceland) and by Japan—were studying secret U.S. proposals to remove some peaceful items from the China embargo list. In return the U.S. wants to lengthen the list of items embargoed to Russia, tighten the “exceptions procedure” by which Britain and others have sent certain strategic goods into Russia. The U.S. would continue to have no dealings with China but would agree to China trade by its allies.*

What Can They Sell? Trade with the Red bloc is still a fraction of the non-Communist world’s trade. Although French exports to China tripled from 1955 to 1956, they still totaled less than $23 million last year. Few expect a sudden spurt if the restrictions are lifted. British exports to China, worth $30 million last year (less than 1% of Britain’s total exports), would probably double. Japanese exports to China, worth $24 million in this year’s first quarter, have about reached the limit unless Peking can ship more and better coal and iron ore to Japan. West Germany, already straining to meet other foreign orders, could not send much more than last year’s $37 million in goods to China without reducing exports to the West.

While Bonn’s business with the U.S.S.R. soared from $400,000 in 1951 to $122 million last year, its total trade with the Iron Curtain bloc is just 3% of the German total abroad, v. 16.7% in 1938. The reason was explained at Hannover by a German trader who for 30 years has sold to Russia, recently visited there. Said he: “Even if the embargo lists are reviewed, our trade limit with Russia would be about $250 million. I know what the Russians want. I also know what they have not got—goods to offer in exchange.”

*Missouri’s Democratic Senator Symington joined the chorus for trade relaxation last week, complained that the U.S. may lose the China market to its own non-Communist allies unless Washington reviews its no trade policy toward Peking.