ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140010-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 21, 2016
• Document Release Date: April 10, 2009
• Sequence Number: 10
• Publication Date: April 19, 1973
• Content Type: REPORT

 Approved For Release 2009/04/10: CIA-RDP85T00875RO01500140010-6
73 11v
Secret
Economic Intelligence Meekly
On file Department of
Commerce release
instructions apply.
1 State Dept. review
completed
Not referred to
EXIMPBANK. Waiver
applies.
Secret
CIA No. 7406/73
19 April 1973
Copy No. `
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CONTENTS
China Acquires Additional US Industrial Technology
Burma Invites US Oil Companies for Talks
Italy Seeks US Approval for Arms Exports to Libya
Jordan to Seek Advance on US AID?
France Favors Subsidizing EC Soybean Production
Short-Term Prospects for Exchange Rate Stability Renewed pres-
sures on the international money market will develop in the corning
months.
Expanding US-Polish Economic Relations Imports of capital
equipment from the United States are likely to grow rapidly during
the next few years.
World fugar Situation Remains Tight This Year Strong demand
probably will keep world sugar prices high despite a record crop this
year.
Note: Comments and queries on the contents of rhic publication arc welcomed. They may be directed
r..
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ECONOMIC INTELLIGENCE WEEKLY
Notes
China Acquires Additional US Industrial Technology
Peking has purchased a $41 million urea complex from two Japanese
firms, Toyo Engineering and Mitsui Toatsu Chemical. This new complex,
which will incorporate technology supplied by an American company, M.W.
Kellogg, is the fourth fertilizer plant to be purchased this year. The first
three were obtained from a US controlled Dutch firm, Kellogg Continental.
The attendance by US Steel, Continental Oil, Caltex, Mobil, Dow Chemical,
Monsanto, Squibb, and Gleason Works at the spring Canton Trade Fair offers
the possibility of further sales of US technology.
Negotiations are in
progress with Monsanto and Westinghouse for several major installations
that could more than double the $300 million value of Western plants
purchased by China this year.
Burma Invites US Oil Companies for Talks
Interested US companies (about 25 so far) will go to Rangoon
beginning in mid-May to compete with German and Japanese governmental
oil organizations for rights to conduct offshore exploration in Burma. The
Burmese government has shifted from its previews policy of requiring that
all foreign financing for development purposes come from governmental
sources only. The policy change reflects the government's decision to boost
export earnings through oil development, which has stagnated since the
industry was nationalized 10 years ago.
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Italy Seeks US Approval for Arms Exports to Libya
Rome has requested US approval to export a second order of 150
M-113 armored personnel carriers to Libya. The APCs are manufactured
in Italy under US license and cannot be exported to third countries without
US approval. Libya had relied exclusively on the USSR and Czechoslovakia
for APCs until last year when the United States permitted Rome to export
an initial order of 150 APCs. At that time, Rome also received approval
to deliver 27 Boeing and Augusta Bell helicopters to Libya.
Amman may request an adw.inc.: on this year's US aid payments. The
US Embassy estimates that Jordan's unfinanced budget deficit will rise about
$31 million in the next two mo:,1 is unless advance foreign payments are
obtained. Of the nearly $100 million in total foreign budget assistance
Jordan is slated to get in 1973, only $10 million of US support assistance
and a contribution of $22 million from Saudi Arabia are to be received
in the first half. As an alternative, Jordan could draw down foreign exchange
reserves - $285 million at the end of March, the equivalent of a year's
imports - to meet this deficit.
France Favors Subsidizing EC Soybean Production
France is lobbying for protective EC policies affecting soybeans, the
United States' largest agricultural export. As the world's leading market
for soybeans and soybean meal, the EC last year bought about $1 billion
worth from the United States. EC countries now produce only negligible
amounts of soybeans, but Paris is angling for subsidies under the EC
Common Agricultural Policy that would enable French farmers to grow
soybeans profitably. The Minister of Agriculture claims that France has a
planting potential of only 350,000 acres, but the acreage obviously depends
upon the size of the subsidy and the price of competing crops. If plantings
were limited to 350,000 acres, output probably would equal about 20%
of French consumption and 4'/% of EC consumption.
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Short-Term Prospects for Exchange Rate Stability*
Although the international money market has been calm since the
inauguration of the European joint float on 19 March, renewed pressures
will develop in the coming months. Balance-of-payments projections for the
major industrial countries indicate the following:
West Germany The mark, currently near the bottom of the
joint float band, will soon become a strong currency again.
A trade surplus on the order of $2 billion in the second quarter
of 1973 should ensure growing demand for the mark.
France A trade surplus of $500 million in the second quarter,
aided by seasonal factors, also will keep the franc strong.
Japan A surplus of about $1.6 billion is projected for the
current quarter. The Bank of Japan is prepared to intervene
in the market, if necessary, to prevent a sharp yen appreciation,
but it probably will not encounter strong upward pressure
before fall.
Other countries The Canadian dollar will remain close to parity
with the US dollar, and the lira will probably stabilize, but
increasing trade deficits sliculd cause sterling, the Swiss franc,
and the Scandinavian currencies to weaken. The United
Kingdom probably will experience a record trade deficit of
about $600 million in the second quarter.
autumn.
demonstrate a willingness to support the band when pressures increase and
unless provision is made to control the flow of the massive funds available
to speculators, a successful attack on the float is likely, probably before
Market behavior will, of course, be affected by central bank interest
rates and intervention activity as well as by balance-of-payments trends.
Psychological and political factors also will continue to affect the market.
The joint float arrangement is an inviting target for money managers and
speculators with billions of dollars at their disposal. Unless the Europeans
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Expanding US-Polish Economic Relations
Polish purchases from the United States - up by one-half last year,
from $73 million in 1971 to $112 million in 1972 - should increase even
more in 1973.
? Orders already have been placed for an estimated $150
million worth of livestock feed, and additional contracts
probably will be forthcoming.
o Purchases of machinery and equipment, traditionally a
small share of imports from the United States, should also
rise sharply.
If, as expected, US sales to Poland double this year, the longstanding
trade surplus with the United States will turn into a deficit in 1973.
Beyond 1973, imports of capital equipment from the United States
probably will grow rapidly.
? Contracts and cooperative venture deals already have been
signed with such firms as International Harvester, Alan
Scott, and Textron.
? A recent Polish delegation to the United States expressed
Foland's desire to i,nport large amounts of equipment for
the copper industry.
? Premier Piotr Jaroszewicz informed Export-Import Bank
President Kearns during his visit in early April that Poland
will seek $200 million in US credits this year.
The President's decision last November to authorize Export-Import
Bank financing for Poland should help US firms to win Polish contracts.
The B,mk already has authorized credits to finance part of the purchase
prices of two meat processing plants, a Sendzimir rolling mill, and a
Cyber-72 computer system. The Bank's recent upgrading of Poland's credit
rating may lead to an increase in Poland's use of Ex-Im credits.
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World Sugar Situation Remains Tight !'his Year
Growth of demand in 1973 probably will keep sugar consumption
above production for the third consecutive year. World sugar stocks have
fallen to abnormally low levels, and pressure on sugar prices has intensified.
The free market price, now 9 cents a pound f.o.b. Caribbean ports, is likely
to fluctuate between 8 and 9'/z cents per pound during most of 1973, upfrom
averages of 7'/z cents in 1972 and 4'/z cents in 1971.
Production declined in 1971-72, mainly because drought and other
problems reduced the Cuban crop sharply. World output in the crop year
ending in August, however, is expected to each an all-time high of 76 million
tons - about 3% above the 1970 peak. One factor in the rise is a partial
recovery of Cuban production, traditionally the source of about one-third
of the sugar moving in international trade. Cuba's crop seems likely to reach
5.3 million tons - 20% more than last year but only two-thirds of the
record 1970 crop. Expanding production in South America - particularly
Brazil - is compensating for much of Cuba's production shortfalls.
World sugar consumption has been growing about 2% annually since
1970 and is likely to amount to about 77 million tons this year. World
stocks thus are expected to decline by a million tons by next August, to
16 million tons. Because the ratio of stocks to consumption - 21% - is
already reflected in prices, a further substantial price increase seems unlikely
during the next few months. Prices could jump late in the year, however,
if a poor crop causes the USSR or China to buy on the free market, as
they did last December and January.
Continuing high market prices are unlikely to affect supplies in the
preforentiai US sugar market this year. US production is up, and although
US prices are currently below the free market price, foreign suppliers will
not want to jeopardize their future quotas in the US market by divertine
supplies to the free m;,ket.
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