EAST GERMAN TRADE WITH THE INDUSTRIAL WEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01098A000200050001-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 25
• Document Creation Date: December 9, 2016
• Document Release Date: April 4, 2001
• Sequence Number: 1
• Publication Date: December 1, 1973
• Content Type: REPORT

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Confidential
East German Trade with the
Industrial West
Confidential
ER RP 73-21
December 1973
Copy N2
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WARNING
This document contains information affecting the national
defense of the United States, within the mea wing of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohib ted by law.
Classifl,d by 015314
Exempt from general
dectossIflcation schedule of E.O. 11652
exemption category 55(1),(2),(3)
Automatically daclotsll?led on
Dot, Impossible to Determine
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EAST GERMAN TRADE WITH
THE INDUSTRIAL WEST
SUMMARY
The mounting economic dependence of the German Democratic Republic
(GDR) on the industrial West (IW) poses major policy questions for the regime.
The GDR has turned increasingly to the IW since the late 1960s to offset a
slowdown in Soviet and East European deliveries of most industrial materials
and agricultural products. The IW has also filled growing GDR needs for
particular kinds of machinery, chemicals, and metals not available in the
Communist world. As a result, GDR imports from the IW since 1968 have
outstripped exports, and medium- and long-term indebtedness is now US $900
million, nearly three-fourths of the value of exports to the IW.
GDR dependence on the IW will go on rising even though growth of trade
with the IW will be slower. GDR imports of raw materials and semimanu-
factures from the IW, now about one-third of total imports of such products,
will probably be half the total by 1980. The GDR will also need more Western
investment goods, although they are likely to drop as a share of total imports
of such goods.
The GDR must soon begin speeding up the growth of exports to the IW if
the regime is to avoid serious payments problems in the late 1970s or a slowdown
in economic growth. Most of the increase in exports will have to consist of
finished goods. The GDR has the manufacturing capacity, but not the right
products, for a rapid expansion of machinery exports. The GDR has some
salable consumer goods, but it does not have enough capacity to push exports
to the IW while trying to catch up with domestic demand and meet export
commitments to the USSR and Eastern Europe.
While the regime is trying to improve the design, quality, and marketing
of machinery and to expand the supply of consumer goods, it can buy time by
stretching out its indebtedness-as yet mainly medium term. By the late 1970s,
however, the GDR must get a real export boom going or find concessionary re-
financing -a more likely alternative-to sustain economic growth.
The GDR's dependence on trade with the IW puts a premium on smooth
political relations. Yet more contact with the West also appears as a threat to
the regime. The leadership has tightened internal controls and will continue to
restrict contacts with Western businessmen, even though it is costly to do so.
In the near future, while the United States is "normalizing" relations with the
GDR, this conflict between the regime's domestic and foreign policy needs
may intensify.
25X1A
Note: Comments and queries regarding this publication are welcomed. They may be directed to
-of the Office of Economic Research, Code 143, Extension 5804.
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DISCUSSION
Introduction
1. In its trade with the industrial West the ( DR is in a special bind.
Materials are in short supply in the USSR and Easttrn Europe, and the GDR
is often forced to barter materials for materials an ex. hange for which the GDR
is in a weak economic position. The regime has been ;orced to turn to the West
for an ever larger share of its materials. At the same tiiae the GDR. relies increas-
ingly on exports of highly processed manufactures, an I these are especially hard
to sell in the West. The regime needs to make GI R products and business
practices competitive if it is to get out of this bind. 1 et, lacking the support of
a national tradition and forced to struggle against the attractions of life in the
Federal Republic of Germany (flat=I, the regime is terrified of uncontrolled
contacts with the West and of the ideological fallout from economic "reform."
Moreover, Soviet surveillance and pressure, along with hard-nosed Soviet trade
policy, leave the GDR small room for maneuver in lealing with these contra-
dictory economic and political requirements.
2. This publication traces the developments in he UDR'-s- trade with the
industrial West from 1908 to 1972 against the backgr?wund of the GDII's special
circumstances. It also presents some preliminary fore, asts of the volume of this
trade for the benchmark years 1976 and 1980. Underl: ing the analysis is a fairly
extensive review of G l)R trade statistics, which are i wager at best; among the
East European countries, only Romania is less forthc? minx. In this publication,
the regime's official statistics have been corrected :.nd amplified to describe
fully the G DR's trade with the industrial West. The esi imates given are explained
briefly in notes to tables and in the Appendix.
The Rise in Imports, 1968-72
:3. Since 1968, (MR imports from the industria West have gone up faster
than in any period since the mid-1950s. Imports from the IW in 1972 were
nearly two and one-half times those of 1968, and th- share of the INV in total
G DR imports rose in these four years from 21% to 11% (see Table 1 and the
map 1.
1. The growing share of the IW in imports is accounted for mainly by
increased purchases of raw materials and semimanu actures. Imports of food-
stuffs, agricultural products, and forestry products (including semimanufac-
tures) rose from 23% to 35% of GDR imports of tl ese commodities. Imports
of fuels, ores, metals, nonmetallic minerals, chemicals, and building materials
rose from 20% to 34%,'o of total imports of basic industrial materials. In contrast,
machinery and equipment imports rose only from 17 fo to 21 %, and imports of
industrial consumer goods from 42% to 47% of the respective totals.
5. A substantial increase in GDR imports from the LW was to be expected
in any case, to fill needs for machinery, special chen icals and alloy steels, and
other commodities not available at all in the USSR and Eastern Europe. But
the shift toward the 1`3,' also reflected an economic pt sh in 1969-70 for which no
provision had been made in trade agreements with tie countries of the Council
for Mutual Economic Assistance (CEMA) and a leveing off in Soviet deliveries
of most materials in 1971-72.
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Growth from 1968 to 1972
1968 1972 (1968-100)
Million US $1 Share of Million US $ 1 Share of Total Total
IW 1W GDR from
Categories2 Total3 From IW 4 (Percent) Total3 From IW 4 (Percent) Imports 1W
Total ...................................... 3,430 720 21 5,530 1,720 31 161 239
Fuels, ores, metals, nonmetallic minerals,
chemicals, and building materials ........ 1,265 255 20 2,040 700 34 161 274
Machinery and equipment (including military
end items)5 ............................ 1,065 180 17 1,770 380 21 166 211
Agricultural and forestry products, food-
stuffs ................................. 910 205 23 1,400 490 35 154 239
Industrial consumer goods ................. 190 80 42 320 150 47 168 188
1 Current dollars, but at 1970 exchange rates.
2 The trade classification adopted by CEMA: the category of chemicals, building materials, and miscellaneous has been combined with that of fuels, minerals, and metals.
3 Imports are based on GDR statistics adjusted to reflect 1970 exchange rates (where necessary) and to compensate for the understatement of the value of imports from
the FRG. The understatement arises through entering these imports on the basis of 1 GDR mark equal to 1 FRG mark (i.e., "accounting unit") in intra-German trade.
4 Imports from the IW are obtained as follows. The totals are obtained from GDR statistics by adjusting to 1970 exchange rates and compensating for understatement
of imports from the FRG (see note 3, above). Entries for commodity groups, except for agricultural and forestry products, foodstuffs, and one or two other single
commodities, reflect approximately the same coverage as do Western trade statistics. The value of agricultural and forestry products and foodstuffs is a residual, of
which about two-thirds can be accounted for in 1968 and somewhat more than one-half in 1972 from official Western trade statistics. The balance represents Western
reexports, chiefly through London, Antwerp, Rotterdam, and Hamburg, of commodities from overseas countries largely unaccounted for even in "general" exports to the
GDR. Grain, animal feed, cocoa beans, coffee, oilseeds, and wool are some of the products involved.
5 The inclusion of military end items in this category is inferred by residualizing. The category also includes scientific devices, medical and professional instruments,
and optical equipment, not included in SITC category 7.
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Ii. The USSR and Eastern Europe still supply nost of the fuels, ores, and
metals imported by the UDR, as has been true since A'orld War 11. In 1971, the
1'SSR provided the following share of key GDR imports (percent of total,: I
('rude oil ............... 82 Pig iron.............. 99 Primary aluminum..... 92
Hard coal .............. 53 Rolled steel products.. 82 Tin ................... 60
Coke ................... 42 topper............... 43 Zinc .................. 91
Iron ore ................ 96
Eastern Europe supplies most of the remaining coal. coke, and rolled steel and
some nonferrous metals. In 1971, Czechoslovakia aid Poland alone delivered
.10% of the hard coal. 50% of the coke, and 11% o' the rolled steel products.
IIungary provided most of the bauxite (78%) and st me alumina (23%).
7. The growth of Soviet deliveries of materials :o the GDR, however, had
already been slowing down in the late 1960x. Deliverie; of petroleum products fell
to only a fraction of the 1965 level, and coal deliveries tad dropped by almost one-
half. Deliveries of copper, cotton, and wool had :.lso dropped substantially
until 1970, when they went up sharply. There had b !en no significant increases
for some other important materials, including coke, iron ore, pyrites, pig iron,
and wood. And a slight decline was provided for i i the trade agreement for
1971 75 for materials as a whole, except fuels. This lev !ling off in Soviet deliveries
of materials was accentuated in 1972 by Soviet ccon( mic difficulties, as a result
of which not only the UDR but also other East E iropean countries received
smaller Soviet deliveries and made larger deliveries t 3 the USSR than provided
for in the agreements for 1971 75.
8. The slowdown in deliveries reflects the Soviet conviction, widely shared
in Eastern Europe, that at the "corrected world m irket prices" prevailing in
CE1,IA, it is it losing proposition to exchange mate ials for machinery, a con-
viction especially affecting trade with the UDR. In t to late 1950s, much Soviet-
GDR trade still consisted of such exchanges. In the 1960s the USSR, along with
the GDR's East European trading partners, began to force a shift in the com-
position of trade toward the limit- which probable will not be reached--of
machinery for machinery, materials for materials. TI e USSR. has moved gradu-
ally, in order to give the U1)R time to adjust. T ie Soviet government will
continue to follow this policy toward the GDR as fas and as far as it believes to
be consistent with the regime's economic, and political, stability.
9. Imports from the industrial West, however provided more than one-
half of the total increase in UDR imports of basic materials between 1968 and
1972 (see Map and Table 2). The IW supplied in 1969-71, for example, the entire
increment in imports of clay and refactory materia s, pyrites, and cooper,' as
well as 38% of the growth in crude oil imports, 56% of the additional coke im-
ports, and 17% of the growth in imports of rolled stee products. Imports of these
products from the industrial West are shown in Tat le 3. Moreover, more than
one-half of GDR chemical imports now comes fron the industrial West, with
synthetic fibers and plastics leading the recent incr -ases as a result of a large
rise in 1972.
The year 1971 is the last for which such estimates can be ma It. for some of these commodities.
If imports from the FRG for processing on subcontract are exclut ed, the Soviet shares for crude oil
and copper are 89% and 49%, respectively-
2 Imports of these three commodities from other sources in fac, went down.
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USSR and Eastern
Total 2 Europe 3
Million
US $ 6
Average
Annual
Rate of
Growth
(Percent)
1968 ...........
1,265
....
1970 ...........
1,630
131/2
1972...........
2,040
12
19767..........
2,885
9
19807..........
3,910
8
The Structure of GDR_ Imports, 1972
Million
US $ 8
Average
Annual
Rate of
Growth
(Percent)
Million
US $ 8
Share
(Percent)
Average
Annual
Rate of
Growth
(Percent)
Million
US $ 8
Average
Annual
Rate of
Growth
(Percent)
855
...
255
20
....
155
....
1,040
10
420
26
28
170
4 ]A
1,170
6
700
34
29
170
0
1,455
51/2
1,215
42
15
215
6
1,780
5
1,860
471/2
11
270
6
i Fuels, ores, metals, nonmetallic minerals, chemicals (apart from consumer goods), and building materials.
2 Totals for 1968, 1970, and 1972 are based on GDR and CEMA data adjusted to reflect 1970 exchange rates and to correct for
underevaluation of trade with the FRG. Projections for 1976 and 1980 are based on projected total consumption and the estimated
leveling off in domestic extraction of raw materials.
3 Data for 1968, 1970, and 1972 for imports from the USSR and Eastern Europe represent totals of available partner country data
with estimates for the remaining countries. Projection to 1976 is based mainly on analysis of the 1971-75 trade plans. The projection
for 1980 reflects the expected slow decline in growth of Soviet deliveries, as explained in the text.
4 Imports from the industrial West in 1968 and 1970 represent Western exports, but exclude some steel in Western data and include
substantial West European reexports, as explained in the Appendix. The figure for 1972 is a residual based on the estimate that LDC
deliveries did not change. Projections for 1976 and 1980 are residuals.
5 Totals for other Communist countries and LDCs are residuals for 1968 and 1970. Since overall imports from the group do not rise
in 1972 over 1970, the same is assumed for basic materials. Projections were made for 1976 and 1980 at double the rate of increase in
the 1960s, a reflection of the new urgency of getting materials from the LDCs.
6 Current dollars, but at 1970 exchange rates.
7 Projected.
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Share of
Total
1958 19A Imports,
1971
Metric Tons (Percent)
Synthetic rubber, ........ 4,623 6 .437 99
Synthetic fibers. . ........ 2,939 6 456 100
(lay and refractory materials... 17,247 27 534 81
Pyrites. . . . . . . . . . ......... . . 10,502 17 889 9
Copper and copper scrap....... 8,084 40 857 31
Hard coal .................... 168.802 206 625 3
Hard coal coke ................ 48,887 162 771 5
('rude oil s ... . ................ 0 1 .609 000 14
Titanium oxides. . . . ........... 8,975 7 808 100
Alumina. ... .......... ...... 34,626 48 684 77
Synthetic dyestuffs............ 2,057 2 279 33
Nitrogen fertilizers ............ 453,079 186 678 32
Phosphate fertilizers........... 109,565 22 399 100
Rolled steel products........... 161 .266 228 659 7
I Some amounts are estimated. Percentage figure s shown are neces-
sarily approximate in view of incomplete GDR statistics and dis-
crepancies between them and Western statistics.
2 Crude oil is Middle Eastern (Iraq) oil provided o the GDR on the
account of the Netherlands and the FRG. The Fl G provides oil for
processing; the products are then returned. For this reason, this oil is
not included in the total tonnage of imports report( d by the G DR.
10. In shifting purchases to the West, the GDR first turned to the FRG.
In 1969-70, FRG deliveries of materials increased by $141 million (at 1970
exchange rates), six-sevenths of the entire net increment in all such deliveries
from the IW. Since then, other IW countries especi t.lly Belgium-Luxembourg,
the Netherlands, Japan, Switzerland, and the Un-ted Kingdom-have con-
tributed most of the growth in GDR imports of ma -erials, making substantial
medium-term credits available for such purchases 3
11. Although the industrial West will continue o provide a growing share
of the GDR's total imports of basic materials, the rate of growth of these imports
from the IW should decline. First of all, the rate of growth of total consumption
of domestic and imported raw materials and imported semi manufactures is likely
to drop from 5% to about 4% per year in the late 1971Is. The leadership hopes to
maintain an average annual rate of growth of about % in net material product
(NMP), but (1) the GDR probably cannot afford ;he necessary investment,
in view of its commitment to immediate increases in )ersonal consumption, and
(2) the labor supply is tight, as the labor force is not t xpected to increase appre-
ciably before 1975 and its growth will average only 0.5% per year in 1976 80.
3 The main recent increase in imports from the FRG has been it urgently needed foodstuffs, feed
supplements, and consumer goods, for which favorable credit tern-; have been made available.
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Moreover, a planned increase in services may force a reduction in industrial
employment.
12. At the same time, the regime may be able to cut the ratio of material
consumption to NMP. A plan for keeping the rate of growth of material con-
sumption almost 2 percentage points below the rate of growth of NMP in 1971-75
proved to be unrealistic. Nevertheless, the recent investment boom should permit
some long overdue material savings by introducing more modern equipment.
13. About 40% of the GDR's basic industrial materials come from imports.
With total material consumption growing at about 5% per year through 1975
and dropping gradually to 4% per year by 1980 and with domestic production
of materials increasing very slowly (the growth rate dropping from somewhat
over to below 2% per year),' imports of materials should grow at 9% per year
in 1973-76, slowing to an average of nearly 8% per year in 1977-80.
14. The USSR, the GDR's main supplier, is likely to continue the slow-
down in the growth of deliveries of materials. Given the provisions of the trade
agreement for 1971-75, Soviet exports of basic materials will grow at about
5112% per year through 1976, compared with 6% in 1971-72.5 There is no hard
information available on GDR expectations for 1976-80, but the disappointment
indicated by East European leaders after the CEMA meeting held in August
1973 suggests that the USSR is not likely to reverse the long slowdown in the
growth of material deliveries to Eastern Europe, including the GDR. Moreover,
the strong interest shown by the GDR in expanding oil imports from the Middle
East indicates that it is expecting to look there for a larger share of its imports
after 1975. The current rise in world market prices for oil should redouble the
Soviet determination to slow down deliveries to Eastern Europe, so as to maintain
or increase the flow of oil for cash to the West. A further slowdown to a rate of
5% is projected through 1980, on the assumption of a slower growth of Soviet
oil and gas deliveries. This may be on the high side since no Soviet commitments
have been made past 1975 for crude oil and natural gas.
15. An increase is assumed in deliveries from other Communist countries
and the LDCs. Imports from these countries have risen very little in recent years,
but the GDR hopes to expand direct imports of crude oil from the LDCs, as
indicated by large forward orders for tankers. Accordingly, imports are projected,
perhaps optimistically, as increasing 6% per year, double the rate in the 1960s.
16. The projections of GDR imports shown in Table 2 imply a drop in
the rate of increase of deliveries of materials from the industrial West from 29%
in 1.971-72 to 15% in 1973-76 and 11% in 1977-80. Even so, by 1980, imports of
basic materials from the industrial West are shown as exceeding those from the
USSR and Eastern Europe.
4 Natural gas production increased rapidly in recent years, but is likely to level off in another year
or two, as Soviet deliveries rise. Output of lime and gypsum should rise substantially, while output
of salt, potash, and sand and gravel grows moderately. Extraction of zinc, lead, and copper ore is
holding steady, and output of coal, iron ore, and pyrites is declining.
5 Soviet crude oil deliveries are to rise from 11.2 million metric tons in 1972 to above 16 million tons
in 1.975; natural gas deliveries from none to 4.5 billion cubic meters. It is assumed that increases in
1976 will be somewhat smaller.
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Purchases of Machinery from the Industrial West
17. A decision taken in late 1967 to accelera e the modernization of the
GDR's economy led to a jump in investment in 1961 70, accompanied by a rise
of 38% per year in machinery imports from the ind=istrial West. In the wake of
the regime's decision in late 1970 to cut back on new investment starts, Western
machinery deliveries grew more slowly in 1971 and have since leveled off.
18. The lag between changes in investmen , activity and imports of
machinery from the West is reflected mainly in d(liveries on contracts of 35
million or more, as shown in Table 4. Deliveries on the se contracts peaked in 1971,
the second year after the acceleration of investment in 1969. The percentage
increase in machinery imports was much greater thar the increase in total invest-
ment in machinery and equipment. Similarly a decl no set in only in 1972, the
year after the leveling off of investment, and an eat en sharper decline is to be
expected in these deliveries in 1973, judging from )utstanding orders and in-
complete import data for the first half year.
19. Major contracts for machinery and equipment reflect wide fluctua-
tions in new investment projects undertaken to "m )dernize" the economy. In
many of them the equipment incorporates "new tee mnology," especially in the
chemical industry. In 1968 72 the CDR bought, amcng other things, equipment
for seven petrochemical installations worth some $90 million, two plants for pro-
ducing radial tires ($12 million), a plant to produce m ik cartons ($5 million), two
electro-steel plants ($19 million), a paper plant ($5 m Ilion), and a polycondensa-
tion and spinning plant ($16 million).
20. Some of the large orders, however, repro: ent state of the art tech-
nology within the capability of Communist producers as in the case of purchases
of more than $120 million worth of railroad freight tars and $25 million worth
of merchant shipping to modernize transportation. St eh equipment is bought in
the West because East German and other Communi it suppliers of such equip-
ment are booked up far in advance and also because they are not interested in
changing specifications to meet GDR requirements.
Machinery Deliveries to the GDR by the Industrial 1 test and Machinery
Components of GDR Investment
1968
1969
1970
1971
1972
Total machinery deliveries .............
169
215
320
348
358
Large contracts ....................
20
30
63
136
108
Others .............................
149
185
257
212
250
Machinery component of GDR invest-
ments .............................
2.730
3,160
3,450
3,380
3.460
I Current dollars, but at 1970 exchange rates.
2 Commodities in SITC category 7. These figures correspont roughly with GDR data for
imports of machinery from the industrial West. The coverage diff Ira from that in Table 1.
3 Estimated deliveries on contracts of $5 million or more, plus o ie at $4 million.
4 Residual.
5 At 1967 prices converted at estimated parity,
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21. Unlike deliveries on large orders, deliveries on small orders responded
promptly to shifts in investment, shooting up with investment in 1969-70 and
leveling off with investment in 1971-72. Even these deliveries change faster than
total investment in machinery and equipment. Although they include compo-
nents and spare parts, purchases of which presumably do not move with invest-
ment, the greater part are direct inputs into investment projects. Many of these
small orders undoubtedly involve "new technology" not available in the
Communist world. In any case, the wide mix and high elasticity of supply in the
Western market give these orders an essential and quite stable role in GDR
investment.
22. Investment has begun to rise again in 1973, and it is reasonable to
expect a new upswing in machinery imports in 1974-75. But imports are not
likely to rise to any such extent as in 1969-71, because Erich Honecker is com-
mitted to avoiding Walter Ulbricht's "campaigns" in investment and production.
At the Leipzig Fair in March 1973, Gerhard Boil, the deputy foreign trade
minister responsible for trade with the West, indicated that GDR purchases of
machinery in the West in 1973-75 would run at about $1.25 billion. Given a
leveling off or drop in Western machinery deliveries to the GDR in 1973, this
total implies an overall increase of 20% more or less during the two years 1974-75.
23. There is no good basis for projecting machinery imports beyond 1975.
The smaller orders are likely to grow in about the same relation to direct ma-
chinery inputs in investment as in 1969--72, but the GDR's investment intentions
are not known beyond 1975. Larger orders will depend on various contingencies.
They will be affected, for example, by decisions on CEMA integration embodied
in the five-year plans and trade agreements for 1976-80. The availability of
Middle East oil on clearing agreements is likely to determine whether the GDR
goes ahead with the long-discussed expansion of refinery capacity, which would
involve major orders from the West.
24. In view of such uncertainties, the growth of machinery imports from
the IW is projected at 10% per year, the implied rate for 1974-75 given above.
This would be at least double the probable rate of growth of investment in
1976-80. In the absence of any indication to the contrary, it seems likely that
the Honecker regime will remain cautious about investment, allowing it to grow
at only about the same rate as NMP-4%-5%.
25. A rate of growth of machinery imports from the IW at least twice the
rate of growth of investment is roughly in line with longer term trends. From
1960 to 1972, machinery imports from the IW rose 14% per year; investment in
machinery, 6%. The ratio is not likely to be much lower than 2 to 1 after 1975; a
good part of machinery imports from the West-including all the small orders-
is complementary to imports from the USSR and Eastern Europe, which will
probably grow at 15% per year or more in 1976-80.6 For some larger purchases,
however, the GDR has options. Purchases of transport, metallurgical, and a good
deal of chemical equipment can be obtained in the USSR or Eastern Europe at
a cost-by waiting longer, by accepting less satisfactory specifications, by pay-
ing more (in nominal terms), and by offering concessions on other transactions.
6 Poland, for example, expects its trade with CEMA to accelerate, with the annual growth rate
rising from 9'/a% expected in 1971-75 to 15% in 1976-80. Machinery trade will continue to lead
the way.
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Such costs trust be weighed against the cost of fur .her increasing indebtedness
to the b'l'est. The tone of speeches and journal arti les, for what that is worth,
suggests that the Ilonecker regime presently leans toward paying the costs of
obtaining Soviet or East European equipment in order to slow down the rise
of indebtedness to the West. But the regime will b , influenced by the example
of other Fast European countries. If several of the n go on drawing heavily on
Western credits, particularly if they find it easy t( refinance as necessary and
to get extended terms and subsidized interest rates, the (;DR is likely to follow
suit. In that case, the growth of machinery imports 'rum the West will certainly
exceed 1(1% per year in the Tate 1970s, although they are still likely to grow more
slowly than imports from ('h:yl.t.-
Imports of Agricultural and Forestry Products
2(1. About one-third of GDR imports from th.> industrial West consist of
agricultural and forestry products. The IW's shars of GDR imports of such
products is as large as its share of basic material imports. Indeed, growth of GDR
consumption has depended as much on IW suppli is of farm products as the
growth of heavy industry has relied on imports of b isic materials from the IW.
27. Imports of agricultural and forestry products from the industrial
West rose at about 24% per year from 1968 to 19 2, reaching $490 million in
1972. In 1971 72 the regime continued trying to cat. h up with popular expecta-
tions even in the face of a decline in Soviet deliverie t of cotton, wool, grain, oil-
seeds, fish, and sugar and little or no increase in deli series from Eastern Europe
and the LD('s. Western trade statistics show sharpy rising exports to the GDR
of such products, reaching about $240 million in 197 but slowing down in 1972.
GDR figures, on the other hand, imply imports front the 1W of $420 million in
1971. Data are shown in Table 5 for Western exports of grain, feed supplements,
vegetable oil, wood, wool, and cotton yarn and th ?ead in 1968 and 1971. In
addition, as shown in Table 6, West European reexports provided the GDR
with grain (including US corn), tropical fruit, raw -offee, cocoa beans, oilseed
cake and meal, tobacco, oilseeds, and wool. These r :exports are not covered in
the statistics of the 1W on exports to the GDR, alt tough they are included in
GDR imports from the 1W. These selected reexports in 1971 are estimated very
roughly at $150 million, considerably less than rewired to account for the
difference between the $420 million shown in GDT import statistics and the
2-10 million indicated by Western statistics.`
28. Growth of imports of agricultural and fore. try products is likely to be
slower through 1980. The main reasons for expecting he growth of these imports
to slow down are that (l) a further decline of Sovi, t deliveries of agricultural
and forestry products seems unlikely, and small increases are likely in imports
of processed foods from Eastern Europe and in deliveries of tropical fruits, nuts,
coffee, and cocoa from the LDC's, (2) expanding outp it of synthetics should lead
to less reliance on natural textile fibers while plastics and light metals will prob-
7 In 1975, GDR machinery deliveries to CEMA will still be abtut one-third more than combined
Soviet-East European deliveries to the GDR. But GDR deliveries continue to lag, and by 1980 the
difference will be substantially less. After 1980 the rates of growth sf machinery the GDR exports to
and imports from CEMMA will also come closer together, prohabh in the range of 10% to 12% per
year.
" For further discussion see the :Appendix, which presents a re oneiliation of GDR import data
with western export statistics.
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Selected Exports of Agricultural and Forestry Products and Related
Semimanufactures from the Industrial West to the GDR
Thousand Metric
Tons
Index 1971
(1968 = 100)
Grain ...................... 503 601 119
Oilseed cake and meal........ 257 367 143
Round wood ................ 30 13 43
Wood simply shaped ......... 5 4 80
Sawn wood ................. 2 24 1,200
Plywood and veneer ......... 1.7 5.5 324
Wool ...................... 3 7 233
Vegetable oil ................ 24 39 162
Cotton yarn and thread ...... 9 22 244
Apparent Reexports of Selected Agricultural and Forestry
Products from the Industrial West to the GDR 1
Rice ................................
25
32
Barley ..............................
0
60
Corn ................................
0
380
Tropical fruit ........................
63
101
Raw coffee ..........................
5
21
Cocoa beans .........................
14
16
Oilseed cake and meal .................
25
92
Tobacco .............................
9
6
Oilseeds .............................
39
96
Wool ...............................
0
5
I These estimates are derived by subtracting partner
country exports from total GDR, imports. Since partner
country statistics are not quite complete, there may be
some overestimation. On the other hand, some commodity
groups probably include reexports for which the GDR
does not list total imports. The main problem, however,
is the use of Western export data along with Soviet and East
European export data and along with GDR data on imports
from partner countries; to add these together may involve
double counting. For example, Australian wheat delivered
to the GDR in 1971, shown by Australia as an export to
the GDR, was paid for by the USSR and therefore (1)
shown as part of Soviet exports to the GDR and (2) included
by the GDR in imports from the USSR, not in imports
from Australia. For discussion of differences in Western and
Soviet concepts and practices in recording foreign trade,
see the Appendix.
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ably replace wood increasingly, and (3) the intensi y of the regime's efforts to
catch up with popular expectations, frantic in 1970 ;1, has already begun to ease
as the ]"arty and the people adjust to "detente." "he average annual rates of
growth are projected at 14% in 1973 76 and 12% it 1977-80, much lower than
the rate in 1969 -72. This projection still allows the absolute increment to grow
substantially, rising in 1977-80 to $480 million, com Jared with only about $285
million in 1969 72. Moreover, the projected level of imports from the IW could
equal Soviet plus East European deliveries by 1980.
Small Role of Imports of Industrial Consumer Good 1
29. The GDR does not buy much in the way of industrial consumer goods;
they account for less than 6% of total imports and lets than 9% of imports from
the IW. Clothing and furniture are the two princil al imports. A considerable
part of all types of imports of finished consumer gocds probably goes to special
high-price stores for East Germans (Exquisitlaeden), hard currency shops for
foreigners (Intershops), and other special markets.
30. Imports of finished consumer goods are a :pected to grow rapidly in
1973 - 75 by an average of 13'_ % per year became of the regime's drive to
put more consumer goods on the market. Therea ter, imports of industrial
consumer goods are projected to rise at 5?/a per year n 1976 80 as the GDR be-
gins to reap the benefits from the recent acceleration in investment in consumer
goods industries.
:31. The regime's main interest will then turn o importing raw materials
and semi manufactures for producing consumer goods --agricultural and forestry
products, as above, as well as some imports treated :n this publication as basic
materials (particularly clay, synthetic fibers, and pls3tics).
Projected Total Imports
32. The projections for imports of the various Commodity groups imply a
pronounced decline in the overall rate of growth of niports from the IW (see
Table 71. The rate drops from an average of 2.1% in 1969 72 to 12is% in
1973 76 and to 1 I% in 1977-80. The projections foi 1973-76 are undoubtedly
1972
(Million
US S')
Average
Annual
Rate of
Growth
1973-76
(Percent)
976
(h [illion
U 3 $')
Average
Annual
Rate of
Growth
1977-80
(Percent)
1980
(Million
US $ 1)
Total... ................ ........
1.720
12'2
,755
11
4,150
Basic materials. ... ...............
700
15
215
11
1,860
Machinery and equipment..........
380
5
460
10
675
Agricultural and forestry products...
490
14
830
12
1.310
Industrial consumer goods..........
150
13'
250
5
305
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better than those for 1977-80. They rest on import decisions already taken for
the 1971-75 Plan, and GDR concern over mounting indebtedness is not likely
to constrain imports in these years. Nevertheless, very good or very poor Soviet
and East European harvests or an abrupt shift in the trend of world supplies
and prices could undermine even these medium-term projections.
33. The projections for 1976-80 are much more speculative. For example,
developments may overturn the basic assumptions made about the GDR's
growth rate (that it will drop a percentage point), Soviet trade policy (as reflected
in assumptions on deliveries), and world prices (assumed to follow the trends of,
the last several years).
Indebtedness and the Trade Balance
34. In 1970-72 the GDR's trade deficits with the IW averaged close to
$350 million a year. In 1971, when a big effort was made to push exports and do
without imports, the trade deficit still ran to $280 million. Even with high and
rising earnings on invisibles and transfers from the FRG, the balance-of-payments
deficit averaged more than $200 million a year in the past few years. After some
allowance for an increase in short-term indebtedness, it appears that medium-
and long-term indebtedness rose from roughly $300 million in 1969 to perhaps
$900 million at the end of 1972.9
35. The GDR can live a while with payments deficits even larger than
those in recent years, because existing indebtedness-still predominantly medium
term-can be replaced by long-term indebtedness. Such a shift in indebtedness,
dollar for dollar, reduces current debt servicing. Of course, there are limits to
the use of such a procedure, given the structure of imports and Western banking
and business practices. And, once the process is completed, there will be little
chance for further shifts, except as Western governments become willing to
underwrite still longer term loans and perhaps even to refinance debts on a
subsidized basis.
36. If the GDR could increase exports to the IW at 16%-17% per year
through 1976, the debt service ratio would not rise seriously even if the GDR
did not try to hasten the current shift toward long-term indebtedness. On any
-likely assumption about earnings on invisibles (even excluding new large trans-
fers from the FRG), exports would then increase by 81% to 87% in the four
years and indebtedness would at most double.'? If, on the other hand, the GDR
is able to raise exports at no more than 10% to 14% per year-which appears
to cover the probable range-then more or less serious payments problems could
emerge by the mid-1970s.
Capabilities to Expand Exports
37. A determined effort, and strong Western demand, will be needed in
1973-76 if the GDR is to approach even the 1969-72 average annual rate of
9 Without any allowance for the depreciation of the dollar since 1970. An adjustment to 1972
exchange rates would produce an estimate perhaps 10% higher.
10 These calculations assume 1970 exchange rates; both would change at current exchange rates,
but with little effect on the relationship between the growth of exports and the growth of
indebtedness.
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growth of 14% per year in exports to the industria West. A big push to raise
exports was made in 1969, after several years of slog growth, and exports to the
area rose 29%. Since then, however, the rate has dripped, ranging between 7%
and 12% per year. To increase exports by 14% per, yt ar, the GDR would have to
exceed recent average rates of increase for the mote salable machinery items,
divert some consumer goods and chemicals desired by the USSR, disappoint
part of the expectations of domestic consumers (especially for selected clothing
items and furniture), find other markets for the steel products that West
Germany has put under quota, and perhaps shift textile exports among
markets to avoid quotas.
38. Consumer goods and machinery accountec for more than one-half of
the 52% increase in exports to the industrial West from 1968 to 1971, as shown
in Table 8. The same commodities are likely to rem in in the lead through the
mid-1970s. Increases in capacity in the late 1960s ant a high priority for exports
explain how the GDR was able to reach the rates of i icrease attained for sales of
textiles (15%), apparel (about 16%), leather goods (36%), glassware and
ceramics (20%), and furniture (24%) to the industr al West. Modernization of
existing capacity, on the other hand, was sufficient to permit higher rates of
increase in sales of metalworking equipment (2012%), textile and leather
industry machinery !34%), electrical equipment 34%), miscellaneous ma-
chinery and appliances (23%)," and shipping (18'=2 %)_
39. The availability of machinery for sale abroa I reflects increased special-
ization in machinery production within CEMA. Ot ter CEMA countries have
expanded their exports to the GDR of machinery that the GDR produces itself.
At the same time, Soviet purchases of some of these t_'pes of machinery from the
GDR have dropped, leaving excess domestic ca.pac ty in many cases.12 As a
result, the CDR has been trying hard to develop other export markets, although
with mixed success--exports of office equipment and agricultural machinery to
the West have actually dropped.
40. As one might expect, exports of most materials lagged because of
resource constraints and, in part, bottlenecks, in processing capacity. The main
exception was nonferrous metals, which grew 20% pet year in 1969-71 to satisfy
a processing contract with the FRG. The rates of gr twth were low for sales of
food and live animal,, (8.9%), crude materials (7.4%), fuels (5.4%), iron and
steel (4.5%), and chemicals (7.1%). These commoc ities, which amounted to
one-half of sales to the industrial West in 1968, accc unted for more than one-
fourth of the increment in sales to the West in 1969 71. A high priority given to
chemical exports to the USSR helps to account for tl e slow growth of the sales
of materials to the industrial West. FRG imposition of a ratio of 2.5 to I for steel
exports to the GDR over steel imports from the GD I explains the low growth
of the GDR's steel exports.
41. Switch sales, and perhaps some reexports, of materials did show a very
rapid increase. The commodities involved are bought i iainly from less developed
countries but also from overseas Communist countr es and occasionally from
other sources. Food products probably made up moi a than one-half the total,
" SITC category 719.
11 One GDR author indeed claims that output of machinery an, equipment is now only half of
capacity, or less, in several branches.
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GDR Exports to the Industrial West 1
Average
Annual
Million US $ 2 Rate of
Growth
1968 1971 (Percent)
Total ......................... 742 1,127 15
Machinery and equipment 3 ... 116 194 181/2
Industrial consumer goods.... 199 338 19'/2
Other exports 4 .. .... ........ 389 495 81/2
Switch sales 6 ............... 38 100 38
I Based on analysis of GDR and all partner country data.
2 Current dollars, but at 1970 exchange rates.
3 Including scientific, medical, optical, and professional instruments.
4 Domestically produced agricultural and forestry products,
foodstuffs, fuels, ores, metals, nonmetallic minerals, chemicals, and
building materials.
6 This category, which may include some reexports, covers goods
presumed to be of foreign origin-agricultural and forestry products,
fuels, ores, metals and minerals, and chemicals.
although industrial raw materials and some chemicals are also included. These
products were presumably obtained in clearing agreements and were resold,
mainly while en route, to buy more urgently needed foods and industrial
materials.
42. The GDR does not expect to increase the rate of growth of exports to
the industrial West in 1973-indeed, it will drop a little from the 12% achieved
in 1972. Beginning in 1974, however, a new export drive can be expected, based
chiefly on increased availability of consumer goods and textiles. Exports to the
West should regain a high priority, although deliveries to domestic consumption
and exports to CEMA will continue to rise. Special emphasis will doubtless be
put on expanding sales to the FRG, which can most readily absorb a large in-
crease in sales from the GDR. Exports to the industrial West of clothing, furni-
ture, glass and ceramics, paper and wood products, musical instruments and toys,
and textiles could rise at rates of up to 20% per year for at least two or three
years.
43. The average annual rate of growth of machinery sales, on the other
hand, probably will drop from the 18112% achieved in 1969-71. That record
reflected a strong export drive in 1969 and in 1971. Machinery exports probably
leveled off in 1972 and have not increased again so far in 1973. Another push
might be expected in the mid-1970s.
44. Among the other industrial commodities, chemicals offer the best
possibility for expanding exports substantially. Exports of fertilizers, salt, and
potash could increase considerably, and sales of synthetic fibers and plastics-
now bearing a significant weight in total chemicals exports-should continue to
rise rapidly. Ferrous metals exports could do better if the GDR finds alternative
markets for steel not accepted by the FRG. Nonferrous metals deliveries to the
FRG, on the other hand, seem to be leveling off, and semimanufactures and raw
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materials as a whole, including foodstuffs, are lik fly to make an even smaller
contribution to the growth of exports to the West ban in recent years.
45. The GDH thus will push hard to increase the availability of export-
able goods the main present limitation on the gro with of exports to the West-
and to exploit established markets, except in the machinery field, where new
products and new markets are greatly needed. T se growth of exports should
therefore hold up well enough to avoid a threat tc continued economic growth
through the mid-1970s. During the longer term, through 1980, the outlook is
rather less cheerful. The maximum rate of groi ?th probably attainable for
exports to the industrial West in the longer run- -12% per year (the highest
rate attained for any period of five or more years sin ;e the mid-1950s-is scarcely
high enough to support a growth of imports of l I ?i. per year, while keeping the
growth of indebtedness manageable.
Some Implications of Trade for Foreign and Dome tic Policy
46. Heavy and growing GDIt economic dependence on the industrial
West obviously implies a GDR need for stable East West political relations. For
both economic and political reasons, the regime will do what it can to improve
cooperation within CEMA and may do more to stimulate trade with other
Communist countries and with the LDCs. Neverthc less, there is still no alterna-
tive to dealing with the 1W. The same thing could be said, with varying emphasis,
of most other East European countries. "Detente" . erves their urgent economic
needs, although this is of course just one factor in he overall strategic aims of
the USSR in pursuing .,detente."
47. The need for "detente" conflicts, in ore degree or another, with
domestic political needs. The GDR is an extreme ease. The regime intends to
maintain a high level of tension with the West- e specially, but by no means
exclusively with the FRG- -so as to keep the population politically and
culturally isolated and passive.
48. This conflict between economic and politica needs complicates not only
domestic policy but also relations with the West, regi iring that all outside access
he restricted as far as possible. To restrict access invol es limiting the authority of
and information available to the officials designated to maintain regular contacts
with the West. This approach to economic relatiors is costly to the GDR, if
only because of the radically imperfect information ..vailable to all participants
in trade. The outside buyers and sellers most likely t s go on doing business with
the GDR are those who, having accepted the situati mn., set their expectations-
and prices accordingly. Similarly, GDR officials a e likely to continue to do
business with them because it involves less risk.
49. West European officials, businessmen, anc bankers have adapted to
this environment for doing business. They have lonf been "realistic," which is
to say ambivalent, about the East-West conflict that began after World War II.
The current US adaptation to the same realities shculd certainly facilitate US
trade with the GDR, as with Eastern Europe general.y. And, although Western
Europe still has the advantages of location and culti.ral affinity-and of being
entrenched in the market-the GDR's steadily rising dependence on trade with
the West should favor the long-term expansion of U.l trade with the regime.
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APPENDIX
Reconciling GDR and IW Trade Statistics
Significant discrepancies exist between the trade statistics of the GDR and
those of its trading partners in the industrial West. To reconcile these discrepan-
cies is hard, even though they reflect well understood differences in practice,
because of the deficiencies of GDR trade statistics.
These deficiencies include the following:
a. Statistics on total exports to and imports from "capitalist coun-
tries" do not include entries for several countries.' What is more,
after estimates have been made for all missing countries, there are sub-
stantial unallocated residuals in imports and exports.
b. The commodity breakdown is even less complete. Only a four-
way percentage breakdown of total exports and imports is shown by
the GDR, although a more useful five-way breakdown is shown in
CEMA statistics, superior especially in that it is accompanied by a
precise statement of what commodities are included in each category?
A breakdown of exports and imports by major commodity group is
not given for the major trading areas, much less by country. Statistics
for exports and imports of selected commodites, usually representing
less than one-half the total by value, are given for major trading
partners in each area, partly in physical units and partly by value-
and that is all.
c. The value of trade with the FRG (divided into trade with the
FRG and "Westberlin") is understated because the GDR-without
saying so-converts FRG marks (or the conventional "accounting
units" used in "intra-German trade") into GDR "valuta marks" at
parity. Beginning in 1961, that has been in fact inappropriate. The
usual conversion rate for the GDR "valuta mark" through 1971 was 1
mark equals $0.238. But the official rate for the FRG Deutschemark
from 1961 until late 1968 was 1 DM equals $0.25; from then until the
spring of 1971, 1 DM equals $0.273. The conversion rate for the GDR
"valuta mark" in 1972 trade data was $0.259, but by then the appro-
priate rate for the Deutschemark was $0.31 or higher. Thus, GDR
statistics understated the value of trade with the FRG by almost 5%
in 1961-68; by 13% in 1969-70 and early 1971, and more thereafter;
and by 16% or more in 19723 Corrections for total exports and imports
I Australia, Iceland, Ireland, New Zealand, South Africa, and three OECD countries here con-
sidered as LDCs: Greece, Portugal, and Spain.
2 Except in the case of military end items, which evidently are included under machinery.
3 In addition to the resulting differences, the usual data for "intra-German trade" in terms of
dollars include transactions that are excluded from GDR statistics for the conceptual reasons
discussed below.
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in "intra-German trade" are made readily, of course. but numerous
troublesome problems are created in dealing %-ith commodity break-
downs.
The obvious discrepancies between (;DR and Western statistics, once the
above corrections are made for "intra-German trade ," are that the GDR totals
for trade with the "capitalist countries" for the pore restricted "industrial
West") are higher than those obtained from Wester1 statistics. The problem is
essentially to explain the discrepancies, accountin;; for them by commodity
group and country. A solution is highly desirable bee Luse it permits use of West-
ern statistics (along with CEINIA partner country s atistics) to fill the gaps in
GDR data while maintaining the broader GDR co ?erage.
Ti, coverage is broader because GDR statistics, like those of other East
European countries (except very recently Ilungari ), include all transactions
involving payments, and exports and imports are imp iced to the partner country
of contract (or payment). GDR statistics thus inclue.e on the import side West
European reexports of overseas products (ineludii g US corn). In Western
statistics, these are normally not attributed to the G DR but rather to the West
European country of destination. The West European country either ignores
them entirely or treats them as "imports for reexl orts" and as "reexports,"
which are excluded from standard ("'special trade") ;tatistics.
The (;DR also includes those imports from the West (largely from Western
Europe) bought with the proceeds of switch sales. These purchases appear to
account for the imports from the "capitalist countrit s," mentioned above, that
are not attributed to any partner countries.
The commodities sold in switch sales, again large ly to Western Europe, are
similarly treated as exports to the area, accour tang for the unallocated
residual in exports to "capitalist countries." Practicilly all these commodities
are presumed to originate in the Communist world and the LDCs and to he
treated by the GDR as imports from the appropriate area although for the
most part they do not cross the GDR border.
A final significant discrepancy is between GDIt data on "intra-German
trade" and parallel FRG figures. FRG figures for re sent years include exports
nominally for "consignment"; the Gl)R includes these only when paid for.'
Certain I RG figures (those of the Federal Statistical Office) also include trans-
actions on foreign account, that is to say, FRG goods contracted for with a firm
from another country; the GDR attributes them of course to the country in
question. The same FR(i statistics likewise count e ('liveries and receipts for
processing and return on a "gross basis"---the full ti clue is reported---whereas
the GDR reports on a "net basis"- --only the resulting value added. Finally these
FRG statistics include official transfers in kind on v, rious accounts, and these
too are omitted by definition from CDR. statistics. The FRG statistics most
nearly comparable to GDR figures are those of the Fe leral Economics 'Ministry,
which differ only in respect of including "consignment" deliveries. For the years
before these deliveries started (in 1969), there is as i lose agreement as can be
expected between the statistics of two trading partne ?s.5
I The 0 DR says they are counted when imported, but that is a e phemism, for they are imported
and used immediately when received.
' On the basis of t GDR valuta mark equal to I Deutschemark.
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An attempt at a simple reconciliation of the discrepancies between GDR
imports and Western exports is shown in Table 9. GDR imports from the IW
in 1971 are first adjusted by dividing imports from the FRG by 0.87 to compen-
sate for the understatement discussed above under c. They then amount to
$1,409 million at 1970 exchange rates.6 Parallel Western statistics for exports
to the GDR total $1,142 million, or $267 million less than the GDR import total.
Table 9 accounts for this difference by commodity group and by group of coun-
tries-not in matrix form, however-with each entry by commodity group
associated with an entry by country group.
In interpreting Table 9, one should bear in mind the following:
a. A small part of the excess in GDR import statistics over the
exports shown by most Western countries is accounted for by FRG
deliveries on foreign account, attributed by the GDR to the country
of contract and payment.
Tentative Reconciliation of GDR Imports Statistics with Export
Statistics from the Industrial West, 1971
Million US $'
Discrepancies,2 by commodity group .................. +267
Agricultural and forestry products .................. + 180
Basic materials ................................... 4 74
Gross ......................................... +120
Steel delivered by FRG on `consignment"......... (-46)
Other categories (net) ............................. +13
Discrepancies,2 by country group ..................... +267
Countries for which GDR statistics show excess of 20%
or more over partner exports 3 .................... +261
FRG 4 .......................................... -94
Scandinavian countries 6 ........................... -13
Unallocated (presumed purchases in switch trade) .... +119
Discrepancy between total Western country and com-
modity statistics ............................... -6
I Current dollars, but at 1970 exchange rates.
2 A plus sign ( I) indicates that GDR imports are greater than
Western partner exports to the GDR; a minus sign ( ) indicates
that GDR imports are less than Western partner exports to the
GDR.
3 Imports from Belgium-Luxembourg, Canada, Switzerland,
the United Kingdom, and the United States are more than double
reported exports by Western partners to the GDR. Imports from the
Netherlands and Japan in GDR statistics are roughly one and
one-half times Western partner exports. Imports from Austria,
France, and Italy are 20% or more above Western partner exports.
4 Explained in the Appendix discussion.
5 GDR imports from Denmark, Finland, Norway, and Sweden
all show deficits, compared with partners country exports.
6 The total represents imports from "capitalist countries" (less those for Turkey) and estimated
imports from Greece, Portugal, and Spain.
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b. The part of the deficit in GDR statistics that results from a
comparison with FRG export statistics and mr st of the deficit result-
ing from a comparison with Scandinavian exl ort statistics probably
reflect purchases in switch trade, which apparer tly is not attributed by
the GDR to any country.
c. A considerable part of the GDR unallocated imports in switch
trade probably represents transactions reporter by Western countries
as exports to the GDR.
Finally, it may be observed that the whole tnalysis in the text tables
rests on treating exports by the USSR and Easter 1 Europe as identical with
GDR imports. They are not, of course. In 1971, totJ GDR imports from these
countries were in fact E15.7 million less than Soviet ilus East European exports
(at 1970 exchange rates). The differences in indivjr ual commodity groups are
presumably smaller, but undoubtedly give rise to : ame discrepancies between
estimated GDR imports and Western exports.
The reconciliation of GDR export statistics wit 1 Western import statistics
is simpler. In 1971, total GDR exports come out a: $114 million greater than
Western imports, after the latter are reduced by 20, to convert from a c.i.f. to
an f.o.b. basis.7 This difference is largely accounted for by switch sales of
agricultural products and some industrial materials, valued at $100 million.
The difference between GDR and FRG figures is substantial (848 million),
although smaller than in the case of GDR import. and FRG exports. About
$14 million represents the discrepancy in treatin_: deliveries for processing
(discussed above). Most of the remaining diffe ence probably represents
transactions in which the GDR delivered goods tt the FRG (tariff-free) on
account with firms in other countries, chiefly Switze -iand and the Netherlands,
whose imports from the GDR are, all told, nearly :;30 million less than GDR
exports to them. Discrepancies between GDR statist es and those of other coun-
tries are in each case less than 15% of the GDR exp trt figure. All discrepancies
except those involving exports to the FRG and Switzerland are nonsystematic,
fluctuating in size and sign from year to year.
The adjustment is small because none is required for FRG i sports and a very small one for
Austrian and Danish impt,rts. The largest adjustments are of et urse for the imports of overseas
countries, which are very mall.
20 CONFIDENTIAL
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Confidential
Confidential
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 Analysts:
oject 16.6731)
Approved or a ease -
CONTROL RECORD
F
OR SUPPLEMENTAL DISTRIBUTIOO: 28 Dec 73 TATINTL
DISSEM
ER RP 73-21 CONFIDENTIAL
DATE OF DOCUMENT
December 1973
Gilbert Ro ers, Commerce it
Roger D. Severance Commerce
Roger Stechschulte Commerce
Albert Jankowitz, Commerce
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COPY
NO.(S)
RECIPIENT
D
ATE
SENT
RETURNED
60
61
Lewis Bowden, Commerce
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28 Dec 73
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Ivan Matsek, State/INR
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