Iehc 2006 session 101

IEHC 2006

SESSION 101

Cold War and Neutrality: East-West Economic Relations in Europe

11

The new agreement on trade relations again referred to the Trade Agreement of 16

February 1927. It was concluded for a period from 1 March 1947 to 29 February 1948 and

envisioned export into Switzerland in the amount of 3.75 billion Czechoslovak Crowns and

import in the amount of 2.5 billion Czechoslovak Crowns. In practice, this meant extension of

the trade relations. The rationale report for the Czechoslovak government mentioned that the

import of goods for metal industry and for machinery and chemical goods was playing an

important role in meeting the two-year plan. These strategically important commodities

represented 80% of total import from Switzerland. The share of raw materials and semi-

finished products was higher in the import from Switzerland than in the Czechoslovak export.

Thus, in the mutual relations, Czechoslovakia was still holding the position of an "industrial"

country.

24

The trade agreements expired exactly at the moment when the Czechoslovak coup

d'état took place. Consequently, the unclear situation resulted in provisional renewal of the

old agreements, subject to the stipulation that the quota lists would be increased by 25%.

25

New negotiations took place again "under the direction of the Swiss" because a Swiss note of

3 July 1948 set forth categorical requirements for the start of negotiations. The requirements

included mainly a requirement for addressing the issue of the nationalized Swiss property in

the following stages of nationalization (Acts No. 114 and 126/1948 Coll. of laws and decrees)

and acceleration of the compensation procedure under way. Prague had no choice but to yield

to the Swiss pressure. The negotiations were concluded on 25 September 1948 by the signing

of additional confidential protocols on exchange of goods and regulation of payments, once

again with validity for a period of 1 year but this time with a clause that the agreement would

be automatically renewed, if none of the parties terminates the agreement. The agreement

opened up opportunities for transferring the claims of Swiss creditors, both trade-related and

trade-unrelated ones, from the Czechoslovak Republic to Switzerland. Czechoslovak export in

the amount of 3.3 billion Czechoslovak Crowns and import in the amount of 2.8 billion

Czechoslovak Crowns was envisioned. The resulting active balance was to be used to cover

the Czechoslovak financial obligations to Swiss natural persons and legal entities; any

possible residual amount was to be freely available to the Czechoslovak party. The quota lists,

contained in an annex to the protocol, were also amended. The Czechoslovak party was

content with their structure because they ensured opportunities for Czechoslovak export and,

24

 Rational report on and other documents on trades arrangement from  19. 4. 1947, ibidem, no. 34.489/47.

25

 Confidential  exchange of notes made on  28. 2. 1948, ibidem, no. 34.600/1948.

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IEHC 2006

SESSION 101

Cold War and Neutrality: East-West Economic Relations in Europe

12

above all, the import of strategically important raw materials. A confidential letter, which was

"an integral part of the agreement" and which contained Swiss consent to the transfer of

payments for the goods purchased through Swiss companies in third countries, was of special

importance to Prague because it actually ensured a mechanism of circumventing the Western

embargo.

26

The actual trade exchange during 1948 was dramatically declining in comparison with

1947; the level of meeting some quotas was less than 50%. On the Swiss part, this situation

was perceived as a consequence of the change in the Czechoslovak political trend as well as

the tight foreign currency situation. However, not least, very prosaic reasons also played their

role. The reasons consisted in frequent and serious complaints about the quality of the goods

and their prices, which were regarded in Switzerland as inadequate in comparison with the

international competitors. The delivery times of the Czechoslovak industry had a negative

impact. According to the statements of the Swiss party, there were no political obstacles to the

development of trade.

27

The subsequent trade negotiations, which were supposed to eliminate the problems of

the past in the Czechoslovak-Swiss relations once and for all, were taking place from

15 August 1949 to 22 December in the same year. On that day, an inter-state agreement on the

total compensation for Swiss property interests (compensation for the nationalization and

settlement of the Czechoslovak obligations to Swiss insurance and reinsurance companies in

the total amount of 250 million Czechoslovak Crowns) and a trade exchange agreement and

payment regulation agreement were signed.

28

 The financial matters were to be taken care of

by means of a clearing system. Banque Nationale Suisse opened 2 accounts for the

Czechoslovak National Bank. To the first account, labeled as "A", 93% of payments for the

Czechoslovak goods were credited; to the other account labeled as "N" [compensations], the

remaining 7% of the payments for the Czechoslovak goods were diverted and this money was

to be used to settle the claims arising from the nationalization. So that payments could be

started immediately, the Swiss government paid an advance of 10 million Swiss Francs to the

Czechoslovakia's account "N". The agreement traditionally included quota lists. Nevertheless,

26

 Protocols concerning goods exchange, regulation of payments and recompensations, 25. 9. 1948, NAP, PMO,

carton 1395, no. 1456/d v.

27

 Czechoslovak trade relations with Switzerland and hindrances of their advancement, NAP, MFT, Territorial

departments 1945 – 1970, Switzerland, carton 129, no.  209.321/1948; Ch. Späti, o. c., p. 188 – 190.

28

 In this instance, the trade agreement was concluded for 5 years, while the quota lists still only had one-year

term.

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