Under the new law authority to engage in foreign trade has been granted to some of the industrial ministries, trusts, and enterprises. Others must continue to trade through foreign trade enterprises. The delegation of authority has not involved a transfer of basic decisionmaking powers, and the continuance of central control is therefore assured. All trade must be conducted in accordance with binding state plans and guidelines issued by the minister of foreign trade. Every transaction requires approval by the Ministry of Foreign Trade in the form of an import or export license. Central controls have also been retained over foreign exchange and over export and import prices. The main advantage of the new regulation lies in the opportunity it provides for producers to develop direct customer relations, thus enabling them to learn at first hand the preferences of buyers and the nature of the competition they must face. It also encourages them to exercise initiative in seeking out potential customers.

Under the law production for export must be given priority. Failure by economic units to discharge their export obligations adversely affects their profits, even if they meet their total output target, because in these circumstances the production plan is considered underfulfilled by the value of the undelivered exports. This provision applies equally to suppliers and subcontractors of export manufacturers. A positive incentive to exceed export quotas has been provided in the form of export bonuses. Export manufacturers, however, have a greater interest than their suppliers in exceeding the export plan because they are entitled to keep for their own use a portion of the above-plan foreign exchange earnings, whereas their suppliers have no opportunity to do so. This difference of interests has been interpreted by foreign observers as a weakness in the law, in that it may hamper manufacturers' efforts to maximize export production because the requisite supplies and components may not be forthcoming.

The decentralization of foreign trade activities necessarily entails an increased need for well-qualified specialists in foreign trade and international finance, both at home and abroad. The shortage of experts in these fields is to be alleviated through an intensive personnel training program.

Western economists believe the new law to be a step in the right direction in that it promotes an orientation of the economy toward exports. They hold the view, however, also shared by some Romanian economists, that, as long as the country's currency remains nonconvertible and prices fail to reflect the relative scarcity of goods, it will not be possible properly to calculate the profitability of foreign trade nor to improve the structure of the trade on the basis of such a calculation.

In the 1960-70 period the annual trade turnover increased by 2.8 times to a volume of 22,8 billion lei. Exports rose at an average annual rate of 10 percent to 11.1 billion lei, and imports grew by 11.7 percent per year to 11.7 billion lei. From 1965 to 1970 the rise in trade was more rapid; the rates of growth were 11 percent for exports and 12.7 percent for imports.

Although trade relations were officially reported to have expanded from twenty-nine countries in 1960 to 110 countries in 1970, the bulk of the trade was carried on with members of COMECON and the industrial countries of Western Europe (see table 6). Only 15 percent of the trade in 1970 involved countries outside these areas. Between 1960 and 1967 trade with COMECON members increased by little more than half, whereas trade with Western so-called capitalist countries rose almost fourfold. The difference was even more marked in the case of imports from the West, which increased ninefold, so that imports from this area in 1967 were larger than imports from COMECON. The trend was reversed after 1967, mainly because of increasing balance of payments difficulties with Western trade partners.

With a turnover of 5.5 billion lei in 1969, the Soviet Union has been by far the most important of Romania's trading partners. Czechoslovakia and the German Democratic Republic (East Germany) were next in importance within COMECON, with a trade volume of 1.5 billion and 1.2 billion lei, respectively, in 1969. Among trading partners in Western Europe, West Germany occupied first place, with a trade volume of almost 1.8 billion lei, followed by Italy with a volume of 1.2 billion lei and France with 0.9 billion lei. The People's Republic of China has been the main communist trading partner outside Europe, with an annual volume of about 0.5 billion lei in 1968 and 1969.

Table 6. Foreign Trade of Romania, by Groups of Countries, 1960 and 1969
(in millions of lei)¹

Country Group1960² 1969²
ExportsImportsTotalExportsImportsTotal
Westeren industrial states 918 9131,831 2,980 4,432 7,412
COMECON³2,8212,6365,458 5,042 4,819 9,862
Other communist states 318 206 524 781 506 1,286
Developing countries 245 131 376 996 686 1,682
Total4,3023,8878,189 9,79910,44320.242
¹ For value of leu, see Glossary.
² Totals may not add because of rounding.
³ Council for Mutual Economic Assistance.
Source: Adapted from U.S. Department of Commerce, Office of Technical Services, Joint Publications Research Service—JPRS Series (Washington), Translations on Eastern Europe: Economic and Scientific Affairs, "Foreign Trade Reform Analyzed," Vierteljahresshefte zur Wirtschaftsvorschung, West Berlin, July-September 1971, (JPRS 54,691, Series No. 580, 1971).

Trade between Romania and the United States has been small because of legal restrictions in the United States against trade with communist countries. The trade volume doubled from about US$40 million in 1969 to US$80 million in 1970 but declined to about US$65 million in 1971. About 80 percent of the trade in 1969 and 1970 was accounted for by Romanian imports; in 1971 the trade was more nearly balanced. Comparable Romanian statistics are available only for 1969. They show a lower volume of trade and a smaller trade deficit. No explanation of this discrepancy is available.