RIGHT NOW, the politicians and the newspapers are talking again about a new thaw in Soviet American trade. As a businessman who has been through several thaws and freezes before, I'm glad to hear it. But permanently improved relations with the Russians will take much more than approval of the SALT II treaty - that will probably require SALT VIII, IX and X.
The Russians are tough, skillful traders. This is not a business for amateurs and do-gooders. Still, I think American businessmen, who are not exactly weakkneed or naive themselves, can do business in Russia and can get a profitable deal - without endangering America's national security.
I got into this business by a series of happy accidents. In 1967, I was working in Chicago as a consultant to firms thinking of expansion into international markets. As I was preparing to go to Europe on behalf of a client, an acquaintance, the publisher journal, Boxboard Container, asked me to go to Moscow to cover the U.S.S.R.'s first consumer packaging exhibition.
Cold War thinking had not yet given way to the notion of detente, but I noticed the Soviets were interested in upgrading the way goods were presented to consumers. They were examining western-style packaging and materials.
I came and wrote an article about the exhibition. I cautioned that this new Soviet turn did not necessarily mean an abandonment of state economic planning or of the Soviet drive toward self-sufficiency.
An astounding thing occurred. The publication of my article coincided with a thaw in U.S. - Soviet relations. Within days of publications, I received calls from newpapers, businessmen and government officials asking for my advice on trading with the Soviet Union. I had become, to my amazement, an instant expert on a subject I didn't know too damn much about - Soviet trade. But then, no one else did either. I began improvising, with more eagerness than experience, bringing U.S. companies to Moscow. I quickly learned enough Russian to do business at trade fairs.
My schedule grew hectic. I would close my exhibition booth in Moscow one night and open a booth in Minsk the next morning.Once, with nothing more than a card table, a roll of Kendall anti-corrosive pipeline tape and a picture of snow-covered pipeline in northern Canada, I won the first order for imported pipewrap from the Soviet Ministry of Gas. These initial contracts with Soviet pipeline contractors led to a $40 million order for bulldozers from International Harvester for building the "Friendship" gas pipline to Western Europe. More than 700 bulldozers were needed to build the second trans-Siberian railroad. My client, International Harvester, got the order.
Incredible timing! Swift, Standard Oil of Indiana, Illinois Tool, Otis Engineering and a host of other companies began building bridges to Eastern Europe through my company. One client, Brunswick Corporation, installed the first bowling alley in the Soviet Union. International Harvester alone got contracts for more than $200 million in sales. Not that it was easy. The Japanese and Europeans already were established in the market, but the Soviets came to American companies for equipment in quantities they could find nowhere else.
It was 1972. President Nixon went off to Moscow. Detente hit full stride. Understaffed, I could not work fast enough to negotiate all the projects and to keep my clients happy. I might have done three times the business but, as it was, I was fortunate enough to participate in deals worth hundreds of millions of dollars. I hepled many major firms get established in Moscow, although typically, once established, they would thank me, develop their own in-house sales staff and dismiss me.
Sensing a Soviet bonanza, some American firms lost their perspective. Ill-prepared businessmen journeyed to Moscow, mesmerized by the huge potential Russian market. Some tried to get deals at any price and lost their shirts. Many times the Soviet negotiators knew the product specifications and market conditions better than the Americans across the table. Soviet scientists and technical institutes had prepared them well, and their trading expertise was exemplified by the Russian grain deals. "5 percenters" role
The independent consultant's role in East-West trade is still vital, if not always popular. We are sometimes called "5 percenters" after the 5 percent commission on sales, which was one standard. The Soviets criticizeus because they believe that our commission is added to the price of anything they buy. Understandably, they would rather deal directly with the American corporate officials also think of us as unnecessary overhead.
But the plain fact is that a lot of western companies - especially American companies, which do not export aggressively anyway - ignore the Soviet market and need a nudge even to consider trying to make a sale there. People like me are good at nudging.
My argument goes like this: Why not risk the cost of sending a machine to a trade fair in Moscow Or Donetsk? Having studied Soviet economic goals, I know the Russians are hungry for this kind of equipment and have made room in their next five-year plan to buy some from the West. You will compete with Germans, Swedes and Italians on this one, but if your product is superior, the Soviets may be willing to pay slightly more for higher productivity. How can you sell a machine if you don't exhibit it? Soviet international exhibitions are the U.S.S.R.'s window to the West.
This argument sometimes works and sometimes results in sales. The Soviets know this. So, even though they prefer not to deal with a "midleman," they need us, and they know it. Likewise, American executives who want to break into the controlled economies of Eastern Europe and, now, China, realize that we provide a useful service.
There are, of course, drawbacks to being an independent operator. You lack the support - both financial and psycological - of a large corporation with a recognizable name and the ability to rally public opinion. You feel that you are alone and resentative of General Electric. This can be both a curse and a blessing. In any event, no blushing violet would last long in the business.
There was the time, for example, when an important Soviet exhibition official became most unhappy with my straightforward approach to business. He told me I would never get another visa.
If he was trying to make me anxious, he succeeded. This was my livelihood, after all. If the Soviets kept me out, perhaps the Poles and others with whom I did business would do the same thing. But he also angered me. With nothing to lose, I went back to my room to the National Hotel - just down the hall from the suite where Lenin lived in the early days of the revolution, and where Occidental Petroleum's Armand Hammer stays these days - and wrote a letter to Leonid Brezhnev asking him to intercede on my behalf. I don't know whether the letter made any difference. All I know is that after the letter was sent, the harassment stopped.
There are times when you are free to take action that a corporate representative, with worries about what his bosses and board of directors will think, cannot take.
In 1977, while I was representing Harnischfeger Corp. of Milwaukee at a trade show in Moscow, fire destroyed much of the roof of the American embassy. To make repairs, Ambassador Malcolm Toon asked the Soviet government for a truck crane, which the Russians were unable to provide. Cold weather was approaching and the absence of a roof meant extreme hardship for embassy personnel. It was a time of tension between our two countries, and Toon had a reputation for driving a hard bargain with the Russians. When Toon visited the Sokolniki fairgrounds to encourage American companies in their sales efforts, he spotted the huge Harnischfeger crane which I was trying to sell. He explained his problem to me and the Harnischfeger representative from Germany.
The representative and I consulted briefly in German and decided to pull the crane out of the exhibition to make the repairs. We had our problems, bureaucratic and otherwise, getting the crane from the fairgrounds through the streets of Moscow to the embassy and back. But the roof was restored before the first snow.
We never did sell the crane. But Harnischfeger executives felt we had done something far more important. Russians always love drama. Maybe the sheer effrontery of our "liberating" the crane from Sokolniki appealed to them, even to the Ministry of Foreign Trade. Learing to walk away
In a typical deal, the Ministry of Foreign Trade is where you do business, usually in very "functional" office - a table and chairs, no frills. The ministry has approximately 40 different buying and selling organizations - trading companies which are responsible for all overseas business transactions for this nation of 250 million people, everything from wheat to computers. All of these organizations used to be in one huge building on Smolenskaya Ploshchad. I got to know the place well. With appointments and always escorted, I would sometimes go from one neogtiation on, say, bowling alleys to another room on another floor where we negotiated over oil and gas equipment. Or mining shovels. Or scientific instruments.
Because trade in the Soviet Union is monopolized by the state, the officials responsible for buying and selling do nothing else. They do not have to worry about advertising copy or labor disputes. And they consider contracts sacred, filling them with time limits and penalty clauses. No planned decision is made on whim. Wvery Soviet purchase is carefully planned to aid in the fulfillment of five-year-plan production targets. It si a waste of time to try ot persuade planning and trade officials to buy something that doesn't fit the five-year plan.
At the very end of the bargaining, the Soviet negotiators will always press for the last discount. They may get the discount and save $50,000 but lose $1 million in good will. The American company gets the deal, but its executives go away feeling that they've been put through the wringer.
One who does business with the Soviet Union must be prepared to negotiate for hours on end in bare, comfortless rooms, to camp for days in spartan Moscow hotels, always careful to remain above the suspicion of either the CIA or the KGB. The American businessman must be authorized by his company to make major decisions without consulting the home office. But most important, he must be prepared to close his briefcase and walk away from a hundred-million-dollar deal after weeks of intense bargaining if he cannot reach a fair deal. If one is weak, his Soviet counterpart will sense this and will fight for a business advantage.
It is sad that the American and Soviet systems are so polarized that they must do business under such rigid conditions. You spend years with these Russians, negotiating, visiting factories, even showing them facilities in the United States, but it is never possible to become more than "friends" in quotaion marks. The system does not allow more. A reising standard
The present five-year cycle is running out, so sales are slow. A new five-year plan will be launched in 1980, and that means a new surge of trade deals, if not with us with someone else.
The Soviets are in the market for American high technology: instrumentation, oil and gas equipment, construction machinery, "turnkey" factories - complete plants for manufacturing consumer goods. Americans cannot sell soap or pencils, although we may sell factories to make them. Soviet tastes are becoming more sophisticated. They do not simply want a factory for shoes; they want one for better shoes.
The Soviet standard of living is rising and the people want quality. There are always lines for quality products, while the low-quality shoes stay in the stores. From the Soviet standpoint, America's high technology methods will save labor and also raise quality in their own factories.
Is it in our interest to help the Russians develop a more efficient economy? I don't think I should be the one pass judgment on that question, but my own answer is yes. A healthy, prosperous society is usually less dangerous to its adversaries than one which needs everything. In any case, however Americans feel about this issue, the Russians will find willing sellers among our friends - the British, German, Japanese, French and Italian companies that compete with us.
Nor should anyone be cajoled into believing the Soviet Union one day will be an open, competitive market like America or Western Europe. Market projections and advertising techniques don't work in a state-controlled economy. The Soviet Union may, for example, enter the world market and become a voracious buyer of a particular product - such as a million tons of a particular chemical - then never to buy that product again. Its main objective, as always, is to meet production goals and to achieve self-sufficiency.
To this end, the state-controlled machine can be awesomely effective. It took little more than 10 years for the Soviet Union to move from an average farm-tractor manufacturer into the world's leading producer. By concentration of effort, the Soviet Union has become the world's No. 1 oil producer. America used to be first in both.
Because of the delicate nature of trade between the Soviet Union and the United States, political winds must be monitored constantly by U.S. businessmen. Defense Department qualms increasingly restrict the sale of high technology, as with Dresser Industries' delayed drill-bit plant deal and Sperry-Univac's abortive attempt to sell a computer to Tass news agency.
Ironically, the Soviet Union sells America titanium sponge, industrial diamonds, chromium, even oil - all of which U.S. defense applications. The Soviets sell to us because they need the cash.
I am encouraged by the political signals coming now from the Carter White House. In the past, this administration has made no real effort to encourage this trade, as was made during the Nixon administration.
Do we need the business? No. The United States and the Soviet Union can live without mutual trade. We are both dealing from positions of strength. But let's not forget that America's economic strength is an important component of our national security. I've traded with the Soviets in the best of times and the worst of times. I would settle for something in between CAPTION: Picture, no caption, By James A.Parcell - The Washington Post