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Soviet Goods Held Unlikely to Flood U.S. : Trade: Bush’s plan to grant Most Favored Nation status is a good-will gesture, but problems in the country will keep exports low.

From Reuters

President Bush’s offer to lower tariffs on Soviet goods could help bring the Soviet Union into the mainstream of global trade but is unlikely to generate a flood of Soviet exports to the United States.

The widely expected trade concession, part of a broad new trade agreement, gives the Soviets trade terms already granted most other U.S. trading partners. The Most Favored Nation status means U.S. tariffs on Soviet exports will fall to as low as 5% from 50%.

Congress must still approve the trade pact.

Trade experts said Soviet firms will show greater interest in the U.S. market. But obstacles remain to growth of trade, including severe transportation and administrative problems among the Soviet Union’s 15 republics.

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In addition, two-way trade will be slowed because the Soviet currency, the ruble, is not convertible into dollars or other currencies.

“It will have a psychological effect,” said Margaret Chapman, trade director of the American Committee on U.S.-Soviet Relations.

But trade will only move ahead “little by little,” she added.

“It begins to normalize the commercial and economic relation between the United States and the Soviet Union,” said Walter Workman, director of international policies and programs for the U.S. Chamber of Commerce.

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The pact had been delayed by Soviet curbs on the free emigration of Jews and other minorities and failure to protect foreign patents, copyrights and other intellectual property. But U.S. officials say the issues have been resolved.

Even with new trade status and loans, the Soviets will not soon become a major American trading partner, the experts said.

Soviet exports to the United States last year totaled $1.1 billion, less than much smaller nations such as Finland or Turkey. In 1989, imports from the Soviets were only $703 million.

Major Soviet shipments in 1990: silver and platinum, worth $336 million, and petroleum products, $331 million. Vodka, caviar and fur shipments were far less.

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U.S. exports to the Soviet Union have ranged between $1.2 billion and $4.2 billion over the last 10 years, with farm commodities the major American shipments.

The Chamber of Commerce’s Workman said believing that the Soviets are backwards and can produce little the United States wants is wrong.

“There are some technologies where they are world class--laser technology, for one, a spinoff from their space program,” he said. And the Soviets have an educated work force.

But the Soviets must push ahead with economic reforms, he said, adding: “It is a very uncertain environment in which to do business” now.

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One of the main ways Soviet and U.S. firms have done business has been barter. Pepsico Inc. has bartered with the Soviets since 1972, trading Pepsi-Cola syrup for the U.S. distribution rights to Stolichnaya vodka.

Stuart Ross, a spokesman for Monsieur Henri Wines Inc., the vodka’s U.S. distributor, said the new trade status would slash duties on Stolichnaya to 8 cents a bottle from the current $1.07.


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