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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110014-8

almost 200,000 salespeople. In addition, there were 35,572 eating places, including 8,463 cafeterias and canteens in factories and offices. Employment is on the increase after declining throughout most of the 1960's.

According to official figures, retail sales (in constant prices) increased at an average annual rate of about 5.5% during 1971-72 compared with 10% during 1968-69 and 1.2% in 1970. The sharp controls involved by Husak resulted in the low growth in 1970. Sales of nonfood commodities have increased only slightly faster than sales of food since 1960. In 1969 food accounted for 47% of total retail sales, manufactured goods for 50%, and public eating places for most of the remainder. Textiles, clothing, and footwear constituted 36% of the manufactured goods sold. Official statistics exclude sales on the farmers' market, above-plan sales by producing enterprises, and sales by private craftsmen and other private enterprises made directly to the public.

Retail prices rose sharply between 1949 and 1953 and then declined steadily through 1960, when they were 16% higher than in 1949. There was little increase in retail prices during 1961-67 but a price reform put into effect on 1 January 1967 led to a 29% rise in wholesale prices during the year. Retail prices rose by 5.5% during 1968-68 reflecting inadequate efforts by both Dubcek and Husak to curb a wild buying spree by consumers. In July 1969, Husak's regime resorted to a general price freeze, which remained in effect until the end of 1973. During the general freeze some prices were allowed to fluctuate, mostly in the service sector, but Husak has been careful to exclude consumer goods, particularly food.

Producer prices since 1966 have fallen into these classes of regulation: Prices set by the state, those that can range within certain limits set by the state, and those set freely by producers. In 1966 the share of goods sold to the trading organizations at free prices represented 20% of retail turnover. After Husak's price freeze in 1969, the free list was reduced to 2% of wholesale prices. A new wholesale pricing system is in planning; January 1976 is the target date.

2. Foreign

As a small, highly industrialized country deficient in most minerals and metals, Czechoslovakia depends heavily on foreign trade. In 1972 imports equaled about 7.5% of estimated GNP. Czechoslovakia's total trade and trade balances with major areas are shown in Figure 15. The country is a net importer of all major raw materials except coal, wood, and uranium. It is almost entirely dependent on imports for supplies of crude oil and also requires large imports of metal ores, nonferrous metals, nonmetallic minerals, textile fibers, and rubber. Although domestic agricultural production covers a large part of domestic requirements, foodstuffs, especially grain, also have to be imported. And since Husak assumed power, imports of consumer manufactures have risen sharply. (C)

Czechoslovakia exports mainly machinery and equipment, consumer goods, and other manufactures. These products in general, however, can be sold only with difficulty on the Western market, and at substantial discounts; for the most part they must be sold in barter trade with other Communist countries or less-developed non-Communist countries. In these markets Czechoslovakia must often in turn accept machinery, other manufactures, and even some raw materials that are of inferior quality. Husak's regime thus far has not been able to improve the situation. (C)

a. Organization (C)

Following the Communist takeover in Czechoslovakia in 1948, foreign trade became a government monopoly, as in all Communist countries. All foreign trade activity is under the supervision of the Ministry of Foreign Trade, which coordinates the activities of the separate Czech and Slovak Ministries of Trade. The Ministry prepares long-term plans, negotiates trade agreements, and maintains statistical records on trade activity and on foreign exchange receipts, expenditures, and profitability. Actual foreign exchange transactions, however, are handled by the Commercial Bank of Czechoslovakia. The Ministry also establishes—and, if necessary, dissolves—the foreign trade organizations which are responsible for the actual conduct of trade operations. By the end of 1973, 46 organizations had been authorized to engage in trade and an additional 11 firms were allowed to act as sales agents in Czechoslovakia for Western firms. The trade organizations operate as independent entities; they receive directives from the Ministry but are not under its direct supervision. Most foreign trade corporations are responsible for specific goods, openly listed, but some—Omnipol, for example—conduct covert trade in armaments.

Trade with other Communist countries, and with many less-developed non-Communist countries, is conducted on the basis of bilateral clearing agreements. In trade with Communist partners, 5-year agreements specify key deliveries and the general magnitude and broad composition of trade. Annual agreements specify the exchange of goods in greater detail and often modify the 5-year agreements. Finally, contracts covering amounts and specifica-

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110014-8