Russia is fully integrated into the world capitalist economy. But unlike the more developed countries, Russia continues to be predominantly an exporter of grain and other agricultural produce, while importing mainly industrial goods. The outbreak of war with Germany means the loss of Russia's main trading partner.
The Bolsheviks' ideological opposition to external economic links, their refusal to pay Russia's World War I debts, and the chaos of the civil war keeps foreign trade to the bare minimum required for the country's industrial development. They pursue a policy of virtual self-sufficiency, drawing upon Russia's large energy and raw-material base for the country's needs.
With the creation of the People's Commissariat of Foreign Trade, active Soviet trade operations begin. An Anglo-Soviet trade treaty is followed by one with Germany. Lenin's New Economic Policy loosens the commissariat's monopoly on foreign trade, allowing other organizations to be established which can trade directly with foreign partners.
With the end of the NEP, foreign trade is restructured to eliminate decentralized private trading practices. Fearing the unpredictable movement and disruptive influence of foreign market forces, Stalin reasserts the state's control of all foreign trade activity. Corporations with monopolies over specific commodities are established, and imports are largely restricted to essential factory equipment.
To support rapid industrialization, the USSR increases imports drastically. By 1931 it is the largest buyer of British and American machinery. To pay, it unloads grain and raw materials on the depressed world market. Charging the USSR with dumping cheap goods to further undermine capitalism, the U.S. restricts Soviet imports, France imposes sanctions, and Britain ends trade with the USSR.
The USSR's admission to the League of Nations leads to a rapprochement with the West and an increase in foreign trade.
World War II virtually halts the activity of the USSR's foreign trade corporations. With relations cooling after the war, Western Europe and the U.S. impose drastic restrictions on Soviet trade. It turns instead to Eastern Europe and China, where it establishes Soviet-owned and joint-stock companies. In 1946 the Ministry of Foreign Trade is created with exclusive rights to negotiate foreign trade.
The USSR declines Marshall Plan aid and orders its satellites to follow suit rather than dismantle international-trade barriers or provide information about the Soviet system's internal workings. Founded in 1949, Comecon, the Council for Mutual Economic Assistance, ties the economies of Eastern Europe to that of the USSR, creating a trading bloc that endures until the fall of the Berlin Wall.
With a policy of detente, the easing of Cold War relations, and a trade deal with U.S. President Nixon, Brezhnev expands trade with the West and increases the USSR's share of world trade. The discovery of major new Siberian oilfields in the '60s turns the USSR from being a net importer to exporter of oil. The 1973 oil crisis sends the world oil price soaring, fueling Soviet history's greatest boon.
As relations between the U.S. and USSR cool, trade with the West decreases in favor of increased integration with Eastern Europe. Gorbachev reforms foreign trade, granting direct trading rights to select enterprises while allowing certain joint ventures with foreigners. Exporters exploit the vast differential in domestic fixed prices and world market prices. Some accumulate vast private fortunes.
In the late '80s, the USSR tries to reduce imports from the West to lower its hard-currency debt, while increasing oil and gas exports. Seeking increased participation in international markets, in 1987 the USSR requests observer status in GATT, General Agreement on Tariffs and Trade, and in 1988 signs a preliminary agreement with the EEC, European Economic Community.
Desperate to overcome terrible shortages, the Russian government further liberalizes foreign trade. Presidents Boris Yeltsin and George H.W. Bush sign trade, investment, and tax agreements designed to make it easier for Americans to do business in Russia. They confer most-favored-nation tariff treatment for the products of each country and eliminate previous barriers and disincentives to trade.
For the first time, Russia participates in the economic discussions of the G7, the world's seven biggest industrial nations, at the Denver summit in 1997. The following year, at the Birmingham summit, Russia is integrated as a full member, and the G7 becomes the G8.
President Vladimir Putin aims to establish a free-trade zone throughout the Commonwealth of Independent States (CIS). Russia hopes to join the WTO and takes an important step in that direction when the European Union and U.S. both recognize it as a market economy. New trade laws and reforms in energy, agriculture, and other areas are still needed before WTO admission.
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