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13 J. Common Mkt. Stud. 1 (1974-1975)

handle is hein.journals/jcmks13 and id is 1 raw text is: THE BILATERAL CHARACTER OF SOVIET AND EASTERN EUROPEAN FOREIGN TRADE By C. H. MCMILLAN* SUMMARY This paper examines the empirical evidence for bilateralism in the recent trade of the Comecon countries and analyses its sources in socialist foreign trade planning and practice. Particular reference is made to the Soviet experience; and since economic size and de- gree of industrialization have been found to act as important deter- minants of a country's aggregate index of bilateralism, comparisons are drawn between the Soviet and US trade patterns. While there is some evidence of unusual bilateralism in Soviet trade as a whole, the results show for both the Soviet Union and the US a marked variance depending upon the monetary region with which trade is conducted. The evidence suggests that it is the constraints im- posed by 'currency' and 'commodity' inconvertibility in trade with the Comecon countries which largely explain the bilateral nature of Soviet trade in the aggregate. The analysis is then extended to trade among all the Comecon countries, and Comecon efforts to multi- lateralize regional trade are found to have been, through 1970, unsuccessful. Bilateralism has long been regarded as an important characteristic of the Soviet system of centrally planned foreign trade. Writing at the close of the Second World War, Ellis (1945) viewed bilateralism as a serious threat to the future of international trade, and Soviet- style state trading as a principal contributor to the trend. At the same time, Gerschenkron noted that in the inter-war period Soviet foreign trade planning had often been implemented in 'the form of quantitative stipulations in bilateral trade agreements between Rus- sia and her trading partners', and similarly worried about the de- gree to which 'bilateral quantitative commitments by Russia may * Associate Professor of Economics, Carleton University, Ottawa. The author wishes to acknowledge the helpful comments of Bela Balassa, Trent Bertrand and Jean Laux on an earlier draft.

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