Evening star., 1948-10-03

Belgium, for instance, now Is
producing steel in excess of her own
needs. 1t could be used by France.
but France lacks the foreign ex-
change necessary to obtain it from
Belgium, and so looks to ECA for
United States steel.
Arrangements are now being made
for France to get the steel from
Belgium, which will set up a credit
in Belgian francs for the use Of
France In return for the dollar
assistance Belgium gets from the
United States.
Trade Barriers Are Firm
For all Marshall Plan countries
there is an agreement, reached in
July, to clear their trade balances
through the Bank for International
Settlements in Switzerland, with
the creditor countries receiving
partial settlements in dollars.
The plans are there, but in actual
practice very little has been done to
break down trade barriers which
have grown up through generations
and are deeply rooted In national
pride and national customs.
This problem exists within the
countries Of Western Europe, and as
between Western and Eastern
Europe. The West needs the food
stuffs and raw materials Of the East
and can produce finished products
needed by the East to pay for them.
If the iron curtain were allowed
to stand as bar between the west
and the east in trade. it could
jeopardize the whole recovery pro-
gram. Fortunately, the need is
mutual, the two economies are
complementary.
Recently the United Nations Eco
nomic Commission for Europe re-
ported that if east-west trade were
revived to prewar levels, Western
Europe's trade deficit with the
Western Hemisphere could be re-
duced by about 80 per cent.
The ECA report showed how
badly east-west trade in Europe
had been disrupted. These figures
showed that in 1947 Western Eu-
rope, including Germany, exported
to the east only A per cent as
much, measured in terms of con.
slant prices, as in 1888, and Eastern
Europe exported to the west only
SO per cent as much as before the
war.
1t is the policy of ECA to do all
that it can to encourage east-west
trade, but with the proviso that ex-
ports from the west cannot be ma
ter1als which will add to the war
potential of countries behind the
iron curtain.
Aid Is Limited
This Is restriction written into
the law itself which forbids the Use
OF American assistance to producs
for sale to Eastern Europe ma
terials useful in the conduct of war.
This has been construed by Mr..
Hoffman to mean that ECA as
slstance should be denied to any
country which exports such ma
terlas, regardless of whether they
are produced here or in Europe.
The blueprint for ECA's first year
Of operations will not be available
until the recommendation only re-
Gently approved by OEEC in Paris
have been studied and approved by
ECA. Meantime, ECA Is operating
on a tentative six-month program.
and expects to fit that into the first.
year program as 1t Is finally ap-
proved.
The six-month schedule called for
about $2,Ooo,ooo 900 In grants to
participating countries. and $780,
1000 in loans. The grants, which
need not be repaid, are proceeding
on schedule, and will reach the
1900, 100000 figure by the end of
this month.
Only two relatively insignificant
loans have been made, however.
One, for s2,30o,0O0, was to Iceland
for development OF her fisheries in
dustry. The other, for $10,0O0,0oo
was to Sweden, to provide dollars
to bolster its foreign exchange posi-
ton.
Iceland agreed to pay 3 per cent
interest on its loan, and that pre-
sumably will be the rate specified on
the other loans. Terms of the loan
to Sweden have not been negotiated.
Negotiations are in progress with
other countries, and Hoffman has
said he expects the loan program to
go through on schedule.
To qualify for grants, each of the
participating countries signed an
agreement to cooperate with the
others and to deposit, in a special
account, amounts OF their own cur
rencies equivalent in value to the
aid received from ECA.
Pump.Priming Operation
The United States has supplied 5s
per cent Of all the commodities for
which ECA funds have been author
lied. Canada and Newfoundland
have provided 81 per cent, the par
ticipating countries, IL per cent.
Latin America, 8 per cent, and all
other countries, 4 per cent.
The recovery program Is a pump
priming operation on a prodigious
scale. If it is to work, there must
be not only great increases in Euro
pean production and trade, but
above all, there must be peace.
Given four years of peace there is
fair chance that Europe will be back
on its feet economically. Another
war. or the threat of war SO grave
as to divert a major proportion Of
Europe's rising production to arma.