The Baltic States as a British Market in the Past and Future

Continuing on 24

V. POST-WAR FOREIGN TRADE

Being normally countries with a surplus of foodstuffs and with the land distributed among smallholders, where the destruction of 25 agricultural industry is not easy of accomplishment, the question of famine relief as in other European countries ravaged by the war is not likely to arise in the Baltic States. True, in view of the diminution of the home production of cereals and severe requisitioning, it will be necessary during the first post-war year to import a moderate quantity of wheat. In respect of other food items, although there may be some shortages, yet owing to their agrarian structure the Baltic States will be self-sufficing. Given the means of production, such as tractors, agricultural machinery and fertilizers, the Baltic States will, in the course of two or three years, emerge as fairly large-scale exporters of farm products. It may even be asserted that farming in the Baltic States will, within that period, reach the pre-war level, except in dairy-farming. Owing to the rather heavy losses of cattle (about one-third), milk production can hardly reach the pre-war standard in fewer than four to five years. At the same time, as mentioned in the preceding paragraph, restoration of the most vital export industry, that of timber, should be speedily effected.

On the whole, reconstruction of economic life in the Baltic States will be rapid, taking into consideration the fact that the experience gained during twenty years of independence has taught those countries their special potentialities, has enabled them to define the most advantageous lines of economic development, and to find their own place among other nations as international traders. It is precisely this experience and this knowledge of their position which should render the restoration of their economic life comparatively easy.

Imports required by Estonia, Latvia and Lithuania during the two immediate post-war years

We give below the figures respecting requirements for the principal staples during the two first post-war years. Unless already covered by special estimates shown in previous paragraphs, the extent of increase or decrease of the demand for individual import items as compared with the pre-war level is given in the table.

It must be pointed out that the imports contemplated in the following table have been allocated to the two immediate post-war years. This does not, however, mean that these requirements will be definitely covered by the exporting countries within that period, seeing that several obstructive factors, such as the political situation, the shipping position, possibility of supply, financial problems, etc., will have to be reckoned with. Nevertheless, the list of imports, as presented in this report, is a good guide for exporters, particularly for those in the United Kingdom, as to the possible scope of trade with the Baltic States during the immediate post-war period.

Table No. 21 — Principal post-war Import Requirements during the first two post-war years in Estonia, Latvia and Lithuania :

Principal post-war Import Requirements during the first two post-war years in Estonia, Latvia and Lithuania :

It will be seen from the foregoing table that there is nothing extraordinary in the post-war requirements of the Baltic States, with the exception of the heavy demand for means of transport and agricultural machinery. The necessity for these latter items has been substantiated in previous paragraphs. Textile imports—the biggest item in value—are on an average estimated at about 40% above the pre-war level, taking into consideration the cessation of textile imports into the Baltic States since 1940 and the seizure of all stocks by occupation authorities. These import estimates would allow per head of the population annually only £1 worth of imported textiles with a retail value when manufactured of £2 10s. to £3 per annum. These estimates should therefore be considered as rather moderate. The same remark applies to other imports.

It should be stated that the above figures of post-war needs are based on the information available in regard to the economic position of the Baltic States at the end of 1942 and are subject to revision should further misfortunes overtake these countries under the foreign yoke. In that case the import figures might have to be revised in an upward direction.

Value of Imports

The value of the merchandise listed in Table No. 21, if estimated on the basis of pre-war prices, would amount to about £27 millions in the first post-war year and to £20 millions in the second. Together with other goods not mentioned in the table, the total imports of the Baltic States would amount to £31 millions and £24 millions for two successive years. Inflating the pre-war prices by 33% (Sir William Beveridge inflates them by 25%) we arrive at a figure for imports of about £40 millions in the first post-war year and £32 millions in the second.

United Kingdom's share in the post-war Imports of the Baltic States

Having regard to the share of British merchandise in pre-war imports (see Table No. 2), the United Kingdom would experience no difficulty in placing in the Baltic markets goods to the value of about £14 millions in the first and of £12 millions in the second post-war year. The lion's share of exports to the Baltic States will fall to the textile industry, followed by the motor, machinery and coal industries. Imports from the U.S.A. consisting chiefly of cotton, motor vehicles and mineral oils, could be estimated in the first post-war year at about $20 millions and at $11 millions in the second.

Financing of post-war Imports

After dealing with the volume of imports, one must also review the other aspect of the question—the problem of paying for them. It is not unreasonable to anticipate that long-term credits will be made available by the United Kingdom and the United States Governments for reconstruction of the economic life of the countries that have suffered from the war, since most of them will not at once be 28 able to pay for their purchases. The inclusion of the question of reparation in the peace treaties seems to be improbable. According to available estimates, Estonia alone suffered until the end of 1942 losses amounting to about £50 millions from requisitioning and destruction during the actual fighting and occupation. The amount of damage caused to the national economy of Latvia and Lithuania may be estimated at an approximately similar figure, bringing the total losses inflicted upon the economic life of the Baltic States to some £150 millions. Whether the acquisition of any redress or reparation from either Soviet Russia or Germany for the damage they have caused is possible or not, the Baltic States will be obliged in the first place to rely upon their own resources and correspondingly plan their economic reconstruction.

Assets abroad

The foreign assets of the Baltic States may be estimated at about £5 millions. One of the largest of these, shipping, has sustained considerable losses in the service of the Allies. In any case these assets would defray the cost of only a fraction of postwar imports. It will therefore be necessary to pay for imports with exports, as far as possible. This aspect of the problem is examined in the following paragraphs.

Exports

During the last two pre-war years (1937, 1938) exports from the Baltic States were on an average as follows (in percentages) :

Table No. 22 — Pre-war Exports of the Baltic States by groups of Commodities

Pre-war Exports of the Baltic States by groups of Commodities

It is extremely difficult to estimate the post-war exports from the Baltic States. In order to meet the financial strain of post-war reconstruction, it is clear that exports will have to be as big as possible, even if those countries have to deny their own people many essentials. There will unavoidably be a considerable falling-off in exports of all merchandise, except flax, timber and timber materials, such as plywood, cellulose and paper. Timber is one of the natural resources of the Baltic States, the exports of which could pay for a part of imports. It is obvious therefore that in the first two postwar years twice as much timber should be felled as normally. Among agricultural products only flax exports would remain on 29 the pre-war level. The main sources of export of farm products from the Baltic States were cattle-breeding and pig-rearing. As previously mentioned, the losses of livestock on farms are estimated at one-third. As the agriculture of the Baltic States relied solely on home-grown feeding stuff which, with fewer animals to feed, should prove ample, the restoration of the farm animal inventory should be rapid. It may be estimated that the initial export of farm products would be about 50%.

Assuming that during the first post-war year the exports of all merchandise, except timber, timber materials and flax, would be 50% lower, and of timber and timber materials 50% higher than the pre-war level; assuming also that the flax exports would remain unchanged and that during the second post-war year the above percentage figures would be respectively 35% and 100%, the total export from the three Baltic States, on the basis of pre-war exports (see Table No. 22), would be as follows (in percentages) :

Table No. 23 — Post-war Exports of the Baltic States compared with those of pre-war years

Post-war Exports of the Baltic States compared with those of pre-war years

According to the above Table, exports from the Baltic States in the first post-war year would amount to £27 millions and to £34 millions in the second. Of these exports about 40% will be destined for the United Kingdom.

It is obvious that the above figures must be taken with a certain reserve, as errors in this kind of estimate are inevitable. They may, however, be in both directions.

The estimates of possible post-war exports, as well as those of imports, as reviewed in previous paragraphs, will provide those interested with a clearer picture of the possibilities of post-war trade with the Baltic States.

Post-war Balance of Trade

The Baltic States' trade-balance during the first two post-war years will be, on the basis of the estimates made in previous paragraphs, as follows : 30

Table No. 24 — Baltic States' post-war Trade Balance

Baltic States' post-war Trade Balance

Thus during the first post-war year a trade credit to the amount of £13 millions will be needed by the Baltic States, which already in the second year would be reduced by £2 millions. If credits are not given, the restoration of economic life in the Baltic States will be considerably retarded. It is, therefore, vital that the United Kingdom and the United States should make available adequate credits for the reconstruction of the Baltic States, so that they can in their turn contribute towards restoration of economic life in other countries by providing food and essential raw materials, as in the pre-war period. On the other hand it should be borne in mind that the Baltic States will be good potential customers for British goods.