III. THE KREMLIN'S RECENT TRADING ACTIVITIES 19 The New Trade Agreements More Consumer Goods Ordered A Shopping Spree for Ships Most of All, They Want Hard Goods Something Different in Soviet Exports They Have Dug Up Manganese The Emergence of Russian Oil Gold Sales Expanded Reaching Outside Europe IV. WHAT'S BEHIND IT ALL 35 The Kremlin and Peace A Mixture of Motives Their Objectives Haven't Changed Their Practices Haven't Changed The Free World Is Strong The Challenge V. U. S. POLICY ON STRATEGIC TRADE CONTROLS 43 The Background Basic Policy Reaffirmed The New Direction of Policy Reviewing the Control Lists East-West Trade: Road to Peace Trade Within the Free World The China Trade Falls Off They Play by Their Own Rules United States Policy on the China Trade VI. THE BATTLE ACT AND ECONOMIC DEFENSE 55 Battle Act Functions The Money and the Manpower Meshing the Gears Improving the Machinery The Termination-of-Aid Provision Miscellaneous Activities Summary of the Report APPENDICES A. TRADE CONTROLS OF FREE WORLD COUNTRIES 65 B. STATISTICAL TABLES 89 C. TEXT OF BATTLE ACT 99 CHARTS 1. VOLUME OF TRADE OF OEEC COUNTRIES WITH EUROPEAN SOVIET BLOC 6 2. FREE WORLD TRADE WITH THE SOVIET BLOC 21 3. EDAC STRUCTURE 57 _INTRODUCTION_ =Note on "Strategic" and "Nonstrategic"= To help protect the security of the free world, the United States and certain other countries have been working together for more than four years to withhold strategic goods from the Soviet bloc. But how can you tell strategic goods from nonstrategic goods? A good many people have asked that question. It is a reasonable question and it deserves a nontechnical answer. The answer is that strategic goods, as understood in the day-to-day operations of the program, are those goods which would make a significant contribution to the warmaking power of the Soviet bloc.