Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

101.6/1–548

Statement Prepared by the Department of Commerce ¹

secret

[ Washington , undated.]

The “R” Procedure for Export Control

This procedure provides for export license control of all shipments to Europe and dependent territories, which are regarded as a recovery area.

This type of control is considered essential to bring about conservation of dollar resources of the countries in this area, and utilization of these resources solely for purchases in the United States which will promote recovery. It is especially important that United States Government funds be conserved in this way.

There is a considerable feeling that United States exports to Eastern Europe should be under complete control. The “R.” Procedure is believed to be the best method of achieving this result, for the following reasons:

(1) The administrative burden of controlling all exports to Europe will be substantially less than that involved in controlling the exports of so-called key items to the world as a whole. While Europe is an important customer for many of our products, its purchases are made in large units, whereas the rest of the world buys in much smaller individual quantities.

(2) The burden on the American trade community will be minimized by control of all exports to destinations where private trade now finds the greatest number of obstacles rather than by control of many commodities in fairly free supply to all destinations, including those where United States exporters find ready markets for their products. Further, the trade would find the job of properly classifying their products very difficult and the enforcement task of the export control and customs authorities would be substantial. Exporters would be tempted to declare their equipment under one of the many categories not subject to control rather than to classify it accurately.

(3) This program permits scrutiny of all shipments of material which are of interest to the Atomic Energy Commission without the necessity of publishing a list of those commodities. Clearly, the European Continent is the one industrial area with respect to which the AEC need fear rivalry in the production of atomic weapons. Yet AEC is understandably reluctant to publishing a catalog of the materials needed for such production.

(4) This procedure achieves total control of shipments to Eastern Europe without apparent discrimination which might lead to retaliation, but in such a way that a quid pro quo be established for imports from that area.

(5) The procedure lends itself much more readily to conformation with any program of aid to Europe. Many elements of public opinion are insisting that the American Government should know what is done by the aided countries, not only with the funds obtained from U.S. grants, but also with the dollars commercially acquired. To take an extreme example for illustration, the popular acceptance of the Marshall Plan would be seriously damaged if the French used our dollars for industrial materials and their own for nylon stockings. Action taken at this time does not even appear to be directed against the “soft goods” trade of Western Europe, but permits screening that trade effectively without interfering with commerce to other areas of the world.

1. Copies of this memorandum were circulated to members of the National Security Council under cover of a memorandum of January 5, 1948 by the Executive Secretary of the Council, Sidney Souers, not printed, which explained that at the Fourth Meeting of the National Security Council (see footnote 1 to the Report by the National Security Council, p. 511), Secretary of Defense Forrestal had asked that all Council members be furnished the framework of language that might be used in testifying before Congress on the control of exports to the U.S.S.R. and Eastern Europe. The statement printed here was accordingly prepared by the Department of Commerce and was circulated for the information and use of ail Council members.