Foreign Trade of The Soviet Union - Development of The State Monopoly On Foreign Trade

Development of The State Monopoly On Foreign Trade

The government of the Soviet Union has always held a monopoly on all foreign trade activity, but only after the death of Joseph Stalin in 1953 did the government accord importance to foreign trade activities. Before that time, the Bolsheviks' ideological opposition to external economic control, their refusal to pay Russia's World War I debts, and the chaos of the Russian Civil War (1918–21) kept trade to the minimum level required for the country's industrial development. Active Soviet trade operations began only in 1921, when the government established the People's Commissariat of Foreign Trade.

The commissariat's monopoly on internal and external foreign trade was loosened, beginning in 1921, when the New Economic Policy (NEP) decentralized control of the economy. Although the commissariat remained the controlling center, the regime established other organizations to deal directly with foreign partners in the buying and selling of goods. These organizations included state import and export offices, joint stock companies, specialized import and export corporations, trusts, syndicates, cooperative organizations, and mixed-ownership companies.

The end of the NEP period, the beginning of the First Five-Year Plan (1928–32), and the forced collectivization of agriculture beginning in 1929 marked the early Stalin era. The government restructured foreign trade operations according to Decree Number 358, issued in February 1930, which eliminated the decentralized, essentially private, trading practices of the NEP period and established a system of monopoly specialization. The government then organized a number of foreign trade corporations under the People's Commissariat of Foreign Trade, each with a monopoly over a specific group of commodities. The foreign trade monopoly appeared in article 14h of the 1936 Soviet Constitution.

Stalin's policy restricted trade as it attempted to build socialism in one country. Stalin feared the unpredictable movement and disruptive influence of such foreign market forces as demand and price fluctuations. Imports were restricted to factory equipment essential for the industrialization drive that began with the First Five-Year Plan.

World War II virtually halted Soviet trade and the activity of most foreign trade corporations. Trade was conducted primarily through Soviet trade representatives in Britain and Iran and the Soviet Buying Commission in the United States. After the war, Britain and other West European countries and the United States imposed drastic restrictions on trade with the Soviet Union. Thus, Soviet foreign trade corporations limited their efforts to Eastern Europe and China, establishing Soviet-owned companies in these countries and setting up joint-stock companies on very favorable terms. Comecon, founded in 1949, united the economies of Eastern Europe with that of the Soviet Union.

Soviet trade changed considerably in the post-Stalin era. Postwar industrialization and an expansion of foreign trade resulted in the proliferation of all-union foreign trade organizations (FTOs), the new name for foreign trade corporations and also known as foreign trade associations. In 1946 the People's Commissariat of Foreign Trade was reorganized into the Ministry of Foreign Trade. The Ministry of Foreign Trade, through its FTOs, retained the exclusive right to negotiate and sign contracts with foreigners and to draft foreign trade plans. The State Committee for Foreign Economic Relations (Gosudarstvennyi komitet po vneshnim ekonomicheskim sviaziam—GKES), created in 1955, managed all foreign aid programs and the export of complete factories through the FTOs subordinate to it. Certain ministries, however, had the right to deal directly with foreign partners through their own FTOs.

On January 17, 1988, Izvestiia reported the abolition of the Ministry of Foreign Trade and GKES. These two organizations were merged into the newly created Ministry of Foreign Economic Relations, which had responsibility for administering foreign trade policy and foreign aid agreements. Other legislation provided for the establishment of joint enterprises. The government retained its monopoly on foreign trade through a streamlined version of the Soviet foreign trade bureaucracy as it existed before the January 17 decree.