Six giant U.S. companies today signed an agreement in the Kremlin on joint ventures that represent a breakthrough in commercial relations between the United States and the Soviet Union.
Under the agreement, signed between the American Trade Consortium and the Soviet Foreign Economic Consortium, the American companies could invest up to $10 billion in about 25 U.S.-Soviet joint ventures.
The agreement establishes a legal and business framework that will provide the basis for members of the two groups to form individual joint ventures.
It breaks new ground by allowing Chevron Corp., food and tobacco giant RJR Nabisco and four others to take out profits earned in the Soviet Union, said ATC President James Giffen.
The inability to change profits earned in non-convertible rubles--effectively valueless outside the Soviet Union--into foreign currency has been a main obstacle to the development of Soviet ventures with Western partners.
Giffen said at a news conference that room had been left for a seventh partner from the auto industry to replace Ford Motor Co., which last week dropped plans to make cars at a plant in the city of Gorky and left the consortium.
Under the project, Ford would have first exported Scorpio-type vehicles from Ford of Europe plants to the Soviet Union and later built similar vehicles in the Soviet Union.
‘Untapped . . . Market’
“The signing of the agreement is a precedent-setting breakthrough in non-strategic commercial relations between the two countries,” said Giffen, president of merchant bankers Mercator Corp., one of the partners.
“The involvement of the American companies will permit them to enter and participate in a vast and virtually untapped national market.”
The other three U.S. members are Eastman Kodak Co., Johnson & Johnson and Archer Daniels Midland. The Soviet consortium comprises 23 enterprises and several ministries.
“We view it as the initial step of a long-term project,” said American Trade Consortium Chairman Robert Carbonell. “We are not going to be able to supply the whole of Russia with Oreo cookies and Ritz crackers out of our initial joint venture.”
Trade between the United States and the Soviet Union totaled only $1.6 billion in 1987, the last year for which final figures are available.