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share of machinery imports has again risen in line with the country's renewed emphasis on industrial modernization and expansion, and in 1972 machinery accounted for 43% of total imports. The share of imports of food and agricultural products has declined since the mid-1960's and was 12% in 1972. In recent years grain has accounted for about two-fifths of Polish food imports.

The structure of Poland's exports has changed much more than that of its imports during the postwar period. The share of fuels, raw materials, and semimanufacturers has declined considerably, while exports of machinery and equipment have risen as a percentage of total exports. The changes were due largely to the greatly reduced export role played by coal and, more importantly, to the intensive industrialization of the economy. In value terms, machinery exports almost quadrupled between 1960 and 1971.

Exports of agricultural and food products increased rapidly until 1964, stagnated through 1969, rose 18% in 1970, and dropped slightly in 1971. The stagnation was partly due to Poland's loss of traditional food markets in Western Europe — a loss primarily ascribed to restrictive European Economic Community policies on imports of food such as eggs and poultry. In addition, the government has made it a matter of policy to limit exports of those agricultural products that are in unusually short supply on the home market or that can be traded only at an economic loss or on marginally profitable terms.

The geographic distribution on Poland's trade with Communist and non-Communist countries has fluctuated within narrow limits since 1956, with the ratio averaging 64:36. Next to the USSR, which in 1972 accounted for 33% of total trade, Poland's most important Communist trading partners have been East Germany and Czechoslovakia, with 10% and 8% of the trade, respectively. Bulgaria, Hungary, and Romania accounted for another 8% of Polish trade in that year. Yugoslavia accounted for 2%, and other Communist countries, including Albania, Cuba, People's Republic of China, North Vietnam, North Korea, and Mongolia, for 1%. Trade with the industrial West made up 30% of Poland's total trade in 1972, and trade with the less-developed countries made up 8%. Of the trade with the industrial West, 86% was with Western Europe, 6% with Canada, Japan, Australia, and New Zealand, and 8% with the United States.

Poland has conducted considerably more trade with the United States than has any other East European Communist country. In 1972, trade with the United States totaled $219 million, compared with $101 million for Romania. Polish imports from the United States dropped sharply in 1965 after the withdrawal of PL 480 credits, and by 1972 they were still somewhat below the 1964 level. In addition, the trade balance shifted in 1965 from a deficit to a surplus. But because of unusually large purchases of agricultural commodities in 1973, Poland is running a deficit with the United States for the first time in 9 years. Polish sales to the United aStates have about quadrupled since the reinstatement of most-favored-nation status to Poland in 1960.

2. Economic relations with Communist countries (U/OU)

Poland's economic ties with the USSR and the other East European Communist countries have contributed substantially to the accomplishment of its domestic economic goals. It has received from those countries a major part of the machinery and equipment and raw materials needed for industrial development. Those countries, in turn, have provided a market for Poland's rapidly expanding machinery and metal products production, absorbing about 80% of its exports of those items in 1970-71. Roughly three-fourths of Poland's imports of fuel, raw materials, and semimanufactures come from the USSR and other East European countries. During 1970-71, the USSR supplied large shares of Poland's imports of key materials - 100% of the crude oil, 99% of the pig iron, 83% of the iron ore, 61% of the petroleum products, and 70% of the cotton. The USSR and other East European Communist countries - mainly East Germany and Czechoslovakia - have long supplied Poland with about four-fifths of its imported machinery and equipment. These imports have been paid for in large part by machinery and equipment exports, which, in 1971, represented over one-half of Poland's total exports to those countries. The willingness of the USSR to accept large amounts of Polish machinery, most of which is not up to Western standards, has been a major stimulus to the expansion of Poland's machine building industry. In addition, Poland is an important exporter of fuels and raw materials to the Soviet Union; those commodities typically make up one-fifth of Poland's total exports to that country. Figure 24 shows the commodity breakdown of Polish trade by areas.

The prospects for Polish trade with the USSR appear bright for the 1971-75 plan period. The

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200070030-5