East-West Mineral Trade: Understanding The Recent Trends

This article examines some important trends in East-West trade in non-fuel mineral products, in particular the recent decline in Eastern bloc exports of such products. It relates this decline to an improvement in Soviet terms of trade; a deterioration of geological and locational conditions in Soviet mineral production; an increased integration of the CMEA-countries based on a regional pooling of resources; and a surge in demand for mineral commodities in Eastern countries coupled with a slowdown in Western economic growth. Finally, it evaluates to what extent these determinants may evolve in a different direction during the eighties and thus foster East-West mineral trade. Eastern1 bloc trade in mineral products is a subject of perennial interest in the West. When exports increase, there is much talk of the dangers of dependence on the East for critical fuels and materials. When imports increase, talk turns to the danger of Soviet dependence on Western supplies. A common fear is that the USSR may not only seek to meet its own resource needs but also deny the access of Western countries to these resources. This paper, like three other recent additions to the lite5ature on Soviet foreign trade of commodities2, tries to put matters in clearer and cooler perspective. The first section evaluates the structure of East-West mineral trade and tries to identify some important trends of recent years. The second section relies on supply and demand factors, as well on the Comecon connection (the intra-Council for Mutual Economic Assistance mineral cooperation) to explain why there has been a reversal in the mineral trade trend since the end of the seventies. The last section evaluates the factors which could stimulate East-West mineral trade in the future.