The liberalization of foreign economic relations in Hungary, Poland and Czechoslovakia. The authors describes first the organization of foreign trade under socialism and its undesirable consequences for the transition to market economy. He then shows how the peculiarities of socialist foreign trade system and the geopolitic imperatives led to creation of the CMEA. The author surveys studies that show that instead of creating trade, CMEA was, in fact, destroying it. They also demonstrate that since the seventies, the terms of trade favoured the three countries importing relatively cheap raw materials from the USSR in exchange for expensive, low quality manufactured goods. The separation of intra-CMEA prices from the world prices was among t...