TRADE WITH RUSSIA.

New Zealand Herald, Volume LXIX, Issue 21164, 22 April 1932, Page 8

TRADE WITH RUSSIA.

The reasons behind the decision of the British Government to be more conservative in granting trade credit facilities to Russia are the extent of the trade balance against Britain, the efforts of the Soviet to play off one country against another in order to secure longer credit terms and the danger of default. Up to a year ago the maximum term of credits was 2-1 months, but it was granted only when the Advisory Committee considered it to be justified. Then it was agreed to extend the term for heavy industries to .30 months, the Soviet undertaking to place orders amounting to £6,000,000 in Britain. The financial crisis made it necessary to reconsider the whole question, and the first National Government decided to limit the term for all countries to 12 months, but without disturbing Russia's £(5,000,000 programme, which is now exhausted. In future any exten,ion of the period to Russia will carry stringent conditions. The interchange of trade between Britain and the Soviet Union has been very one-sided. Tn the last five years imports into the United Kingdom have totalled £135,500,000, while exports to Russia have amounted to only £25,000,000, goods purchased being on cash terms and goods sold being almost entirely on credit terms. The adverse balance was thus £110,000,000, or, with re-exports taken into account. £9-1,000.000. It. has been made plain to the Soviet authorities that this position is unsatisfactory, particularly in view of the fact that the credit system, as it applies to Russia, which has one purchasing agent, does not. allow of spreading responsibility among individual traders. Some observations on the subject were made in the House of Commons a few weeks ago by Mr. C. M. Patrick, a Conservative, and the. only member who has lived in Soviet Russia. He urged caution in extending credits, for short-term indebtedness is now equal to the whole proceeds of a year of Russia's export trade with the dangers of default intensified by the prospect of a smaller harvest through the mismanagement of "collective farming," the absence of invisible exports and the paucity of internal financial reserves. It is evident from Viscount Snowden's statement that, the National Government is alive to risks and is not disposed to allow the desire for a greater export trade to expose the country to the Joss of more millions in Russia.