ABSTRACT
This chapter analyzes the role played by bilateral trade agreements in world grain trade while focusing on their importance to centrally planned economies. It examines the market conditions leading up to the 1975 US-Soviet agreement, the value of the agreement to both participants, and the effect of the agreement on world grain trade. Most US government bilateral agreements are “entitlements” which guarantee an importer access to US grain markets as well as priority in obtaining the quantity specified in the agreements. The effect of bilateral agreements on world price variability will therefore depend on how these agreements affect the variability in an individual country’s trade as well as their impact on the price responsiveness of that trade. The chapter explores the atmosphere of grains markets in the early 1970s and the events leading up to the signing of the five-year US-Soviet grains agreement.
