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# ENDNOTES

1. This paper is a revised and e~tended version of the earlier paper, “The CMEA System of Trade and Payments: Today and Tomorrow" (1990).

2. CMEA trade and payment agreements could in principle be multilateral. But the difficulty of negotiating multilateral agreements wit. the degree of specificity dictated by the CMEA procedures of contracting and settlement makes them an exception in practice. The references to “bilateral” throughout this paper refer to this de facto rather than legal restriction to bilateralism.

3. Data on intra-CMEA trade are inherently weak. Primary data are largely based on idiosyncratic pricing and exchange rate conventions that differ from country to country and over time, and they are normally "adjusted" in secondary sources by methods that are not always well-documented. Thus, national trade aggregates over both trade regimes and all indicators based on aggregates are merely indicative for orders of magnitude, and the scope for intercountry or intertemporal comparisons is severely limited. Specifically, overevaluation of the TR tends to exaggerate the CMEA shares.

4. “Ruble trade" is merely an approximation of CMEA trade; some CMEA trade transactions are denominated and cleared bilaterally in CC (and, thus, are only superficially different from ruble trade), and a small percentage are denominated and actually “paid" in CC through transfer of fungible funds. On the other hand most trade with other socialist countries and some LDCs is denominated and cleared bilaterally in CC.

5. As will be evident at the end of this section, the CMEA regime is not, as often thought, a random collection of “irrational" practices. It rather exhibits a great deal of internal logic and overall consistency, although its logic is different from that underlying the conventional theory of international trade, and corresponds to the model of central planning from which it is derived.

6. Barter trade is, with the exception of a few large cooperative deals, not feasible for informational reasons. Under a pure barter arrangement, the number of specific commodity exchange rat‘os is n {n - 1]/2, where n is the number of commodities. For n= 100, the number of ratios is 4,950. For any realistic number of commodities, and extending the same pattern to every pair of countries, the number of ratios quickly approaches infinity (McKinnon 1979).

7. According to an alternative definition, “hard" goods are those for which a shortage exists within the CMEA, and "soft" are those in surplus within the CMEA. Both definitions yield largely identical results but there can be notable differences. For example, most agricultural products are “hard” according to the second definition but "soft" according to the first because of inability to access alternative markets.

8. Probably for no other element of the model is the difference between principle and practice as wide as that regarding relative priorities. The preferred practical response to such shortages was, at least through the 198Gs, to default in bilateral agreements as long as retaliation in the form of withholding deliveries from the other side did not create prohibitive costs. Penalties for violations of protocols or contracts were often difficult to enforce.