The Press TUESDAY, JULY 29, 1947. Russian Trade Talks

Press, Volume LXXXIII, Issue 25248, 29 July 1947, Page 6

The Press TUESDAY, JULY 29, 1947. Russian Trade Talks

I Though the Anglo-Russian trade talks were said to have broken down over prices, Mr Harold Wilson’s short statement, on his return from Moscow, shows that the insuperable obstacle was found, at not in i the prices the Russians asked for grain and timber but in their proposals to revise the 1941 * credit agreement. This provided that Britain should deliver £ 100,000,000 worth of goods against 40 per cent, cash and a seven-year credit, at 3 per cent., for 60 per cent. When the Russians complained as the agreement ran that prices and qualities were unsatisfactory, their complaints were met by reducing the price of goods still to be delivered by 131 per cent, and reducing the interest on the outstanding credit (£55,000,000) from 3 to 2 per cent.; but the Russians requested, this year, that the interest should come down to | per cent, and the repayment period be extended to 16 years. It may very well be that the British Government would have conceded the interest reduction if it had been possible to reach acceptable terms for the new trade exchanges—acceptable, that is, in regard to classes and quantities of goods, delivery contracts, and prices; and this assumption would account for the report that the talks had broken down over the price of -grain. But the lengthening of the term of the 1941 credit is another matter, not only because it means that British deliveries, under that agreement must remain unrequited for another 10 years, but because jt appears to follow that the Russians will have sought to spread the performance of their side of the proposed new trade contracts, similarly, over a long period. No credits, it was understood, were involved: simply compensatory exchanges in agreed categories and quantities, at agreed prices, and according to agreed delivery schedules, balances being adjusted progressively, if necessary, by gold payments. But : obviously, if the Russians wanted a long term to complete their deliveries, and especially if they wanted ’ to be free to postpone and accumulate deliveries, while binding the 1 British to onerous obligations and perhaps to a tighter schedule, Mr Wilson was not in a position to agree. . Britain cannot afford, as she was ; once able to afford, to deliver early t and be paid late. That applies parj ticularly to the character of the exi changes proposed. It is exceedingly important to Britain to obtain timber and grain. Timber has badly ■ bottlenecked the housing proi gramme; bread is rationed, wheat i is being bought dear, |or dollars, 1 and financial relief is as necessary as freer supply. Undoubtedly, the British Government would make every possible concession to obtain timber soon and regularly and to be able to buy more wheat off the dollar. But the Russians chiefly require power generating plant and , other industrial equipment in payment. If Britain agreed to tieliver generating plant, to take the most significant requirement, she would, in effect, be agreeing to switch labour, materials, and equipment from the solution of her own anxious fuel and power problem and make the , solution harder and slower. It might be worth whilg, on a balance of considerations, to do so. But the balance would have to be clearly in favour of doing so; and it could be, only if deliveries in return were of commodities urgently needed, sure, early, and sufficient. It may be inferred that the negotiations have failed because it has not been possible to reach this balance. Last year, half of Britain’s exports to t Russia were unrequited: partly because the 1941 agreement provided for trade on such terms, partly because Russian timber deliveries fell short of the specific undertaking. These are terms of trade which Britain cannot continue, situated as she is, and, above all, cannot engage to continue on conditions which increase her own critical difficulties of ' one sort without relieving those of : another. The failure is particularly regrettable because success would have helped to show that Russia’s retreat from Paris did not necessarily mean a retreat behind an . impermeable east-west economic frontier. There must be, and will be,, fresh attempts to prove and develop the possibility of a fair ■ working agreement.