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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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