560.A.L./1–1646: Telegram

The Chargé in the Soviet Union (Kennan) to the Secretary of State


148. Although it is now well over a week since request was made I have still been unable to arrange for appointment with anyone in Foreign Trade or Foreign Affairs Commissariats to present explanations which were subject of my 46 January 7, noon. This delay means, I think, that Soviets are subjecting our “proposals” to very careful study. Following are some of questions which I think are particularly occupying their attention:

They will wish to be entirely clear concerning relationship of tasks of proposed preliminary meeting and of later general conference to those of Economic and Social Council of UNO. I think it likely that they would prefer in general to pursue internatl economic questions through this latter council which, particularly if Internatl Labor Organization should be admitted to membership, would appear to present a more suitable medium for promulgation of Soviet internatl economic aims, which are so often political and tactical in nature, than would a special organization for trade and employment designed to enforce general and permanent principles. Indeed I think it possible that they may try to have entire question of preliminary talks on reduction of trade barriers submitted for prior consideration by Economic and Social Council before they will take a definite position.
Overall objective of increase of internatl trade as means of promoting peace and security and assuring general employment is not one which would naturally find ready enthusiasm in Soviet circles. Soviet instincts are autarchic. They view internatl trade for themselves a means of increasing Soviet strategic economic strength and of achieving economic independence. They would never admit that there was any problem of employment at all in Soviet Union or that employment problem in capitalist countries was susceptible of solution by increased foreign trade.
With respect to provisions relating to state trading, Department is of course correct in noting that they have accepted in past certain minimum purchase commitments. These were however with individual countries and did not necessarily reveal anything of total Soviet plans for foreign trade. Even though a global commitment would not require Soviet Government to increase its trade beyond point to which it had otherwise planned to carry it, it would be equivalent to publication of annual [apparent garble] import plan, and suggestion of entering into any discussion of such a commitment is obviously one [Page 1275] which would seem to Russian officials to call for careful study from policy standpoint.
Soviet economic experts will also wish to study global purchase proposal carefully from standpoint of general principles of their trade monopoly. Although they have not suffered much financially from foreign tariff provisions (two-thirds of their modest prewar exports to US were free of duty and in certain remaining items, duty was paid in effect by US consumers) they have laid great stress as a matter of tactics on establishing principle that most favored nation treatment in Soviet Union in tariff and other matters was equivalent to most favored nation treatment abroad. In this way they have hoped to secure for their state trading system universal most favored nation position beyond Soviet borders while reserving to themselves full freedom of action, even where necessary to evade or make meaningless most favored nation principle, in their own practice. Owing to ignorance or indifference of foreign negotiators they have had no small success with this in past and will not easily part with these aspirations. They will therefore weigh carefully sacrifice in principle which they would be asked to make in undertaking global purchase commitment against modest immediate gains by way of reciprocal tariff concessions which they might conceivably achieve through accepting such an obligation.

Sent Department 148; repeated London 27.