IMPORT TRADE PRACTICES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00046R000300130013-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 14, 2016
• Document Release Date: June 4, 2001
• Sequence Number: 13
• Publication Date: December 23, 1953
• Content Type: REPORT

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SUBJECT Import Trade Practices NO. OF PAGES .4
25X1A
DATE OF INFORMATION 25X1A REFERENCES:
THIS IS UNEVALUATED INFORMATION
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All official and unofficial (black-market) imports of strategic raw
materials and products into. Czechoslovakia were handled by the Czecho-
slovak import-export monopolies (Vysadni spolecnosti pro dovoz a vyvoz).
Representatives of the Czechoslovak Ministry of Foreign Affairs or
Ministry of Foreign Trade did not regularly'act as representatives of
the Czechoslovak Government for either official or unofficial trade
transactions abroad. However, the import-export monopolies were subor-
dinate to the Ministry of Foreign Trade and were under its direct
control, and every chief of department within.these monopolies was
responsible to the corresponding official in the Ministry of Foreign
Trade and had, to act "carefully as a regular merchant in conformity
with fair-trade practices" (Jednat s peclivosti radneho kupce). The
purchasing official for foreign trade (he also handled foreign sales)
acting on behalf of his trade monopoly, was for the most part indepen-
dent within the limits of the responsibilities delegated to him by
the monopolies, but he had to comply with the various trade acts,
decrees, instructions, and guides issued. by the Ministry of Foreign
Trade. In official trade transactions, the purchasing official had to
.follow the approved import plan as a general guide. In his purchases,
he was not allowed to exceed the planned quantities. When dealing
with Western countries, he had to choose his supplier, always act
"carefully as a regular merchant in conformity with fair-trade prac-
tices", and safeguard the interests of the National Bank. Every act
not conforming to this policy was considered sabotage against national
property. As far as purchase of strategic materials was concerned,
the purchasing official had a free hand but had to choose the most
desirable offer with regard to price and the 'safest route of trans-
portation. He had to be ready at all times to justify his actions
by providing competitive bids submitted to him. Theimmediate super-,
visor of the purchasing official in the monopoly was co-responsible
for the actions of the purchasing official.
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2. The purchasing official was assisted by official representatives of
the monopoly in the foreign countries with which he dealt. These
representatives were Czechoslovak citizens and were employees of the
monopoly,. It was their job to keep their superiors informed about
the market situation in the country where they-were appointed and to
render general aid of various kinds. The official representative never
negotiated or contracted trade transactions. The purchasing official
was also assisted by the Czechoslovak diplomatic missions in making
business connections and in carrying on all trade transactions including
unofficial purchase of strategic materials, but in the latter case
the diplomatic missions did not act officially and openly. The commer-
cial attache followed the trends of the market in the country where
he was assigned, collected all bids and requests from foreign firms, and
turned them over to the Ministry of Foreign Trade, which in turn
turned them over to the appropriate trade monopoly. The commercial
attache also followed economic and industrial developments in the
foreign country and relayed this information to the Ministry. A pur-
chasing official of a monopoly, who was sent abroad to handle some
trade negotiations, had to report first to the commercial attache, who
then assisted with the negotiations and informed the Ministry on their
progress and, if especially charged, he controlled the carrying-on
of the trade transactions. The commercial attache also assisted in
handling the payments for unofficial purchases of strategic materials.
when the payments were in cash. In general, the commercial attache
did not contract individual trade transactions, but on occasion he
would be specifically asked and given full power to do so; in such
cases he would conclude the purchase or.sale on behalf of the mono-
poly concerned. The commercial attaches of Communist countries assigned
members. It was the policy of the government to appoint as commercial
officials abroad only reliable Communists with no professional know-
ledge and with no knowledge whatsoever of Czechoslovak industry. This
was for security reasons, so that no information on Czechoslovakia
might be revealed. When such a representative abroad was asked for
information, he had to ask his superiors in Prague, and they could then
decide what information to give.
to other Communist countries were more or less figureheads. They were
usually of working class origin and unqualified to be regular commer-
cial representatives.
During 1952 new personnel were assigned to all the more important
foreign posts connected with commerce of the monopolies, the Ministry
of Foreign Trade, and the Ministry of Foreign Affairs. All of these
people came from the working class and were given a one-year training
course in foreign business by the Ministry of Foreign Trade. These
people had no professional knowledge but were entirely reliable CP
4. For unofficial purchases of strategic goods, trade monopolies rarely
approached the-producer., in most cases preferring to act through a
middleman. This middleman acted on his own behalf and was the genuipeX1X1
supplier. The monopoly sometimes used as middleman its "agent"
the foreign country in question.
autnougn
e monopoly did not come in contact with the producers, it knew, in
most cases, who the producer was. Foreign producers usually preferred
to remain officially unknown to the Czechoslovak trade monopoly they
were supplying, and, on the other hand, the foreign producers usually
preferred not to know the final destination of their goods. Firms
chosen as middlemen were well introduced and had enough connections,
both with producers and shipping agencies, to secure safe transporta-
tion of the goods. These middlemen were rarely business men who dealt
solely in black-market deliveries; more often they were honorable
businessmen carrying on normal business transactions, who in addition
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arranged unofficial deliveries to Communist countries. Their carrying
On of normal business enabled them to arrange unofficial deliveries
unobtrusively. The contract for unofficial purchase of strategic
materials which resulted from negotiations between the Czechoslovak
trade monopoly and the middleman conformed to the usual Western commer-
cial form of business transaction. The terms of the contract were in
most cases dictated by the middleman. The payment, most often in US
dollars or pounds sterling, was against documents, a bill of lading or
bill of freight, an insurance policy, and a quality certificate issued
in most cases by the "Surveillance" in Geneva. The?'Surveillancemmade
sure the quality of the goods conformed to the terms of the contract.
(The "Surveillance" was an international institution which served all
the Communist countries including Soviet reparations deliveries from
East Germany.) The payment usually took place either through irre--
vo.able letter of credit, opened at the Swiss bank, or in cash. Cash
payment has been becoming more frequent. The cash was brought from
Czechoslovakia to Switzerland or Berlin by a diplomatic courier of
the Ministry of Foreign Affairs and delivered there to the supplier
against documents at the Czechoslovak diplomatic mission. When pay-
ment was in cash the procedure was arranged between the trade monopoly
and the Ministry of Foreign Trade, then between that Ministry and the
Ministry of Foreign Affairs, and finally between this latter Ministry
and the National Bank. The amount due had to be covered in the appro-
priate import plan, because otherwise lengthy negotiations between the
Ministry of Foreign Trade and the Planning Office were necessary and
in the meantime the prospective purchase would fall through. Because
of a constant lack of foreign currency in Czechoslovakia and because
of the consequent lengthy procedure in allotting foreign currency to
the import monopolies, convenient short-notice purchases could not be
made. Also seasonal goods could not be purchased at the most convenient
time price-wise, because the foreign currency allotments were spread
over the whole year and could not be concentrated at one time. The
annual import plan, when duly approved by the appropriate authorities,
was, so far as the National Bank was concerned, only a promise that
the necessary foreign currency to fulfill the plan would be allotted
by the Bank. However, an application with details of how and when
the money would be used had to be submitted to the National Bank for
every quarter year, and another detailed application had. to be submitted
to the National. Bank for each month in advance. All the import con-
tracts were labeled: "with the reservation that the necessary import
permit be accorded"..
No special regulations whatsoever existed in Czechoslovakia concerning
means of importing strategic materials or in respect to unofficial
imports in general. There were several usual means, but they were
all handled by the foreign middlemen, not by any Czechoslovak official.
The intention of Czechoslovak trade monopolies was to avoid any
possible implication in unofficial trade activities. The usual prac-
tice was to ship the goods first to an unobjectionable Western country
and then from there to transship the goods to their final destination.
This was always possible with money and with good connections. Ship-
ments into Czechoslovakia were almost all accomplished, when by rail,
through Austria, and when by ship through a Communist port, mainly
Polish or East German. When the goods originated overseas., it was
preferred to ship them directly in ships belonging to a Communist
country with bill of lading listing a West European port as destina-
tion, often a Swedish or West German port,. but the ship would take
the goods directly to a Communist port. When no Communist ship was
available in the overseas port, the goods were shipped to a free West
European port by whatever ship was available and from there trans-
shipped by a Communist ship to a Communist port. When the goods were,
of West European origin, they were shipped by rail to a free West
European port and from there transshipped either by water to a'Communist
port or by rail through Austria. In all cases the goods were shipped
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as transit, goods to avoid customs controls, and the destination was
listed either as the middleman or as a shipping company. Another
practice was to list false data on the shipping papers. Most control
authorities were no specialists and had to take the data in shipping
papers for granted. The practice also was to use an export license
more-than once or to have an export license issued where none should
have been issued according to regulations. (This happened most often
in Italy.) This latter trick was possible through bribing the appro-
priate officials. 25X6
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