7 Firms Negotiate for Soviet Trade : Consortium Holds Exploratory Talks on Joint Ventures
In an effort to capitalize on the blossoming political relations between Washington and Moscow, seven major U.S. companies announced the formation Wednesday of a consortium aimed at developing trade rapidly with the Soviet Union.
At a news conference here, executives of the seven firms said they were still holding exploratory talks with the Soviets about joint venture agreements made possible by recent Soviet trade legislation.
The companies involved are some of America’s largest firms: Ford Motor, Dearborn, Mich.; Eastman Kodak, Rochester, N.Y.; Chevron, San Francisco; RJR Nabisco, Atlanta; Johnson & Johnson, New Brunswick, N.J.; farm products processor Archer-Daniels-Midland, Decatur, Ill., and Mercator Corp. of New York, which is acting as merchant banker to the group.
If the talks are fruitful, executives of the newly formed American Trade Consortium said that they expect to see products with American brand names such as Ford cars and Nabisco cookies for sale on the Soviet market.
Consumer Items
Earlier Wednesday, American businessman Armand Hammer, whose cordial business relations with the Soviets date to the 1920s, signed an agreement for his Los Angeles-based Occidental Petroleum to help the Soviets build two factories to make plastics.
Hammer said construction of the two plants, expected to cost between $160 million and $200 million, will begin next year. The polyvinyl chloride products will be used in food packaging, upholstery and wall coverings.
“This should help to provide Russia with consumer items and improve the standard of living of the Soviet people,” Hammer said.
The Occidental chairman said 75% of the production from the two factories would be sold in the Soviet Union and East Bloc by the Soviets, while Occidental would market the other 25% in the West.
Soviet officials said the project with Occidental is the first of the joint venture agreements permitted by legislation adopted last year.
The newly created American Trade Consortium signed a letter of intent with the Soviets on Wednesday to negotiate a general trade agreement that would establish the principles of the joint venture agreements within the group and establish financing mechanisms.
The letter of intent was signed with the Soviet Foreign Economic Consortium, an umbrella organization dealing with foreign trade.
James Giffen of Mercator, who is president of the consortium, called formation of the group “an unprecedented first step toward expanding beneficial, non-strategic trade between the United States and the Soviet Union.”
Giffen and the other executives present at the news conference said the talks were still too preliminary to attach a dollar amount to the level of expected trade.
He said the Soviets had expressed particular interest in attracting investors in food and agriculture, energy, chemicals, pharmaceuticals and health-care products, medical products, automotive and consumer goods and services--all products offered by the firms involved.
The consortium will provide assistance to companies negotiating joint venture agreements. It is also expected to provide a convenient mechanism for companies to repatriate their profit in dollars, since petroleum exports are a hard currency generator. Thus, other members of the consortium could mutually benefit from Chevron’s investment here.
Other Talks Under Way
The signing of the various Soviet-American agreements coincided with the meetings taking place here of the joint U.S.-U.S.S.R. Commercial Commission, a governmental body, and the U.S. and U.S.S.R. Trade & Economic Council, a private business group.
Commerce Secretary of Commerce C. William Verity Jr. is leading the official American delegation at the talks, which both the Soviets and the Americans are hoping will expand the level of bilateral trade.
Moscow complained Monday that “discriminatory measures” adopted by the United States were hampering the rapid development of trade ties.
