Monopoly of Foreign Trade

(state monopoly of foreign trade), the management of the entire foreign trade of a country by the state. Under socialism, the socialist ownership of the means of production and the planned economy make the monopoly of foreign trade an objective necessity.

The theoretical foundation for the state monopoly of foreign trade is found in the works of V. I. Lenin, under whose leadership the organizational means of implementing the monopoly were elaborated. Lenin considered the establishment of a foreign trade monopoly an important aspect of the socialist transformation of the Soviet economy (Poln. sobr. soch., 5th ed., vol. 35, pp. 123, 124; vol. 36, pp. 182, 183). Furthermore, he believed that such a monopoly was absolutely necessary as a defense against foreign economic and trade expansion. He fought against the opponents of the monopoly, pointing out that the proletariat “will be totally unable to build up its own industry and make Russia an industrial country unless it has the protection, not of tariffs, but of the monopoly of foreign trade” (ibid., vol. 45, p. 336).

The basic function of the monopoly of foreign trade is to ensure the overall interests of the state in foreign trade. The monopoly promotes the achievement of maximally effective export and import operations and ensures the unity of action of all Soviet economic organizations in foreign markets and the coordinated activity of administrative bodies in foreign trade. It guarantees the independent development of the national economy of the USSR and the planned character of its foreign trade. In relations with capitalist countries, the state monopoly of foreign trade is the only defense against economic expansion. In relations with other socialist countries, it is an important method for coordinating the planned development of the national economy.

Among the essential characteristics of the state monopoly of foreign trade are the direct management of the country’s foreign trade exchange by specially authorized administrative bodies, the establishment of administrative bodies or organizations that have the right to make foreign trade deals, and the planning of foreign trade. Other important features of the state monopoly are the foreign-exchange regulation of export and import operations, the establishment of procedures for conducting such operations, and the institution of control over their observance by all administrative bodies and economic organizations that have been granted the right to handle transactions on foreign markets.

In the USSR the foreign trade monopoly was established by the Apr. 22, 1918, decree of the Council of People’s Commissars On the Nationalization of Foreign Trade (Collection of Laws, 1918, no. 33, art. 432). The decree entrusted direct state management of foreign trade to the People’s Commissariat for Trade and Industry, which was renamed the People’s Commissariat for Foreign Trade in 1920 (ibid, 1920, no. 53, art. 235). Since then, foreign trade deals may be made only by bodies specially authorized by the state.

Article 14 of the Constitution of the USSR states that foreign trade conducted under the state monopoly is under the jurisdiction of the USSR as represented by its supreme bodies of state power and state administrative bodies. The Council of Ministers of the USSR heads the system of state administrative bodies in charge of foreign trade. The State Planning Committee of the Council of Ministers, which has jurisdiction over the planning of exports and imports, also participates in the management of foreign trade. The mode of foreign sale and purchase of licenses for the use of inventions is determined by the State Committee on Science and Technology of the Council of Ministers of the USSR.

The Ministry of Foreign Trade (formerly a people’s commissariat) exercises direct state management over foreign trade exchange. According to its statute, which was promulgated on Nov. 12, 1923 (ibid, 1923, no. 108, art. 1035), the ministry was established “for the management of the entire foreign trade activity of the USSR on the basis of a state monopoly.” It carries out its functions in the Soviet Union through its representatives in the Union republics and in several major industrial centers, and abroad, through the trade representatives of the USSR. The State Committee on Foreign Economic Relations, which was established in 1957, also has some authority over the management of foreign trade exchange associated with the construction of industrial and other facilities abroad with Soviet aid. On the basis of and within the limits of their statutes, foreign trade plans, and export and import permits and licenses, all-Union foreign trade associations conduct export and import operations, following a specific nomenclature of goods and services established for each of them. Foreign trade associations are autonomous economic organizations that enjoy the status of juridical persons. In the exercise of their duties they have separate property liability.

Today, the organizational forms of the state monopoly of foreign trade are changed as the general measures designed to improve the management of the national economy are modified. Improvements in the system of foreign trade relations are considered a great reserve for raising the economic efficiency of socialist production. Recently, industrial ministries and several other agencies, production enterprises, and associations have been given a broader role in Soviet foreign trade. The state monopoly of foreign trade is a reliable guarantee of the country’s economic interests and vigorously promotes the foreign trade policy of the USSR.

The experience of the USSR in implementing the state monopoly of foreign trade has been studied by other socialist countries that have established foreign trade monopolies. In some socialist countries, production enterprises and associations, as well as foreign trade organizations, have been granted the right to make transactions on foreign markets. The foreign trade organizations of these countries are subordinate to the ministry of foreign trade and to the corresponding branch ministry.

A greater role for the state in foreign trade is also characteristic of the developing countries, especially those oriented toward socialism. In some countries the state’s role is limited to regulation of and control over exports and imports. Some countries have introduced a state monopoly over trade in particular goods; still others have introduced a state monopoly over all foreign trade. State control over export and import operations and a state monopoly of foreign trade enable the developing countries to take advantage of opportunities offered by foreign economic relations for the development of the national economy.