THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, FEBRUARY 19, 1934 TRADE PACT WITH RUSSIA

New Zealand Herald, Volume LXXI, Issue 21729, 19 February 1934, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS MONDAY, FEBRUARY 19, 1934 TRADE PACT WITH RUSSIA

The signing of a trade agreement between Britain and Russia is actuated by economic considerations mainly if not entirely. On this account it is to be welcomed as a further step toward the general promotion of commerce as an aid to the development of industry. On Britain's side, the step accords with the policy, pursued during the past twelve months, of multiplying trade treaties with other countries: on Russia's it, marks the achievement of a wish long cherished as an integral part of industrial planning. For reasons not difficult to understand, the trade pact docs not imply a covenant of full friendship, and the jubilation of the official organ of the Soviet Central Executive over its effect as eliminating

misunderstandings and difficulties is premature. It is expressly not a permanent treaty; in particular it leaves unsettled the question of Russian debts to Britain, a question calling for a. very different answer from any hitherto offered by the Soviet Government. Until this is squarely faced by that Government no complete accord can be reached. But the reasons for the temporary pact are sufficient. Along with Russia's desire for freer commercial intercourse with other countries, for the purposes of a domestic industrial programme, goes Britain's desire to extend markets for manufactures. It has been said that such an agreement would mean so large an expansion of Russian orders in. Britain that employment would be found there for about 100,000 workers. This estimate, published by the Manchester and Salford Trades Council Executive, is probably excessive, but on last year's figures of mutual trade from Russia and only £3,250,000 sold

—it is evident that some expansion of British industry is likely to result from an agreement providing for a progressive improvement of the balance of purchase until it reaches approximate equality at the end of five years. A similar hope has been raised in France by the signing, on January 11, of a Franco-Soviet trade agreement; there the position was much worse than in Britain, France having sold to Russia only a-tenth of what Russia sold to France. A motive in the recent political recognition of the Soviet Government by the United States, if not the only motive, was the falling export to Russia—down to a mere 12,000,000 dollars' worth last year. Facts such as these suggest the use of "kindly links of gold," phrase of a British Laureate in an age when the gold standard and war debts were unforeseen subjects of debate, as useful international bonds.

How far political friendliness will be engendered, however, cannot be certainly foretold of these pacts with Russia. Although the United States Government has gone the whole way to diplomatic recognition, after sixteen years of refusal to entertain the idea, this step was not taken with any confidence. The Soviet envoy to Washington predicted that a half-hour conference would see every difficulty settled—Litvinoff's astuteness does not prevent, perhaps- it prompts, extravagant estimate:3 of which his "billions of dollars of trade" in World Economic Conference speeches is a classic instance ; the Washington negotiations took ten arduous days. And they were almost wholly devoted to fashioning (safeguards, to make sure that Soviet Russia would not play nasty pranks in America. These safeguards are embodied in a series of letters between President Roosei'elt and the Russian envoy acting in the name of his Government, where they are on record side by side with the essentials of the recognition agreement. An agreement so laboriously embroidered with exacted promises of good behaviour on the part of Russia is not altogether a gilt-edged security of affection. The FrancoSoviet trade agreement took two years to negotiate, and apparently would not have been signed but for the conclusion, in the middle of that period, of a pact of military nonaggression. This Anglo-Soviet trade pact does not really mean what official Russian gratification says it is—the clearing of "the path of normal development between the two countries." Whether it is to be of historical importance in their relations will depend on things left out of tile I document. Had there been a com- | plete understanding on matters still in dispute, matters that the Soviet Government has studiously sidestepped hitherto, the case would have been different. That Government's declared objective, in all its industrial planning, is to make Russia, as speedily as can be, altogether independent of foreign supplies, and there is consequent doubt whether the provided expansion of purchases from Britain will be ardently fostered. It must be viewed as a business understanding with probably early advantage on both sides but no assured improvement in other relationships. So long as the Soviet Government is content to return non-committal answers to repeated questions about the unsettled Russian debts, these relationships must continue to be unsatisfactory. In the agreement with the United States, such questions were left for subsequent discussion through regular diplomatic channels opened by the granting of political recognition, but nobody seems to think this arrangement at all promising. The American claims amount to some 800,000,000 dollars—the claims of private citizens and business concerns for losses suffered in the Russian revolution, and the American Government's holdings of the Kerensky debt contracted before the Bolshevik seizure of power. The British bill is much longer, and is tagged with unpleasant reminders of broken Soviet undertakings. Labour opinion in Britain has expressed itself averse to the mention of these claims in the course of negotiations for a trade agreement, but they cannot very well be left out. Particularly in con-

nection with the Soviet Government's action in the Lena Goldfields claim when the arbitration award to the claimant company was scandalously defied after every consideration had been shown to that Government, has there been left a righteous resentment against it. And the Soviet undertaking to desist from organised Comniunist propaganda in Britain has been so repeatedly and so flagrantly broken that some pressure may still have to be exerted to enforce its observance. While not strictly relevant to the trade agreement, this matter may eventually influence its termination. On the Russian side it is so manifestly temporary, being made in conformity with a declared policy of domestic development, that no complaint can be made of British reluctance to continue it beyond the period of tentative application. Meanwhile, as an experiment in trade expansion, it may contribute sufficient mutual gain to make it worth while.