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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0

The share of trade with non-Communist countries, which accounted for 25% to 30% of total East German trade throughout the 1950's, dropped in the early 1960's, but since then it has recovered and now accounts for about 28% of total trade. Trade with West Germany—the most important trading partner in the non-Communist area—declined absolutely between 1959, when it accounted for 11% of the total, and 1962, when the share was only 8.5%; it has since risen to between 10% and 11% during 1969-71.

Interzonal trade affords access to Western industrial materials and sophisticated engineering products, which are paid for through clearing accounts rather than with convertible currency. The remaining trade with the industrial West is widely dispersed, with no other Western country accounting for as much as 2% of total East German trade. In an attempt to dilute West German influence, however, East Germany increased its 1971 trade with France and Japan by 72% and 62%, respectively.

c. Commodity composition (U/OU)

The commodity composition of East German foreign trade (Figure 31) reflects a heavy reliance on imports for supplies of foods, fibers, fuels, minerals, and metals, and on exports of manufactured goods. Raw materials for industry and agricultural products accounted for about three-fifths of imports until 1960, since then their share has fallen to a little over two-fifths. Imports of light industry products and food products have fallen as a share since 1960, as production of those products has increased enough to satisfy most domestic needs. Imports of machinery and equipment declined from 5% of total imports in 1950 to 3% in 1955, but they rose sharply with the expansion of East German investment—reaching 14% of the total by 1960 and continuing to grow rapidly since that time. Much of that equipment has come from Western Europe, but current long-term agreements provide for large increases in imports of machinery from the U.S.S.R. and the other countries of Communist Eastern Europe.

The commodity distribution of commercial exports has also changed somewhat. Deliveries of machinery and equipment, which made up only 28% of commercial deliveries in 1950, were more than 55% of deliveries by 1953. The share of machinery declined in the mid-1950's to about 50% of total exports, as a result of the inclusion of uranium deliveries in the commercial account. Since then, the share of machinery and equipment has risen somewhat, but not as rapidly as the regime hoped or expected. The other major groups of exports are chemicals and rubber products, textiles and clothing, and petroleum products.

The basic pattern of East German trade—exports predominantly of manufactures and imports predominantly of basic materials—holds true both for trade with the Communist countries and for trade with the less developed non-Communist countries. The pattern is different, however, for trade with the industrialized non-Communist countries, in which there is a higher proportion of raw materials and intermediate products in exports, and a higher proportion of manufactures, especially machinery and equipment, in imports.

2. Balance of payments (S)

East Germany's balance of payments showed an overall surplus on current account until the late 1950's, due to large though declining reparations deliveries and occupation costs levied by the U.S.S.R. From then until 1963, there was a deficit in the current account. Thereafter there has been a slight overall surplus; surpluses with the U.S.S.R. and less developed countries have been largely offset by deficits with the

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0