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

611.6131/2–948

Memorandum Prepared in the Department of Commerce¹

confidential

[Washington,] March 9, 1948.

Subject: Export Controls to Eastern Europe

The National Munitions Control Board exercises authority over the shipment of arms, ammunition, and implements of war to all parts of the world. Other commodities are subject to export license controls administered by the Department of Commerce.

In the latter category, all shipments to the U.S.S.R. and satellite countries, regardless of whether or not the goods concerned are in scarce supply in the United States, have been subject to individual licensing since March l.² An interdepartmental committee is studying the situation with a view to making policy recommendations as to what commodities should be denied to Eastern Europe.³ Meanwhile, the Department of Commerce is using its discretion in the granting or refusal of licenses for such destinations.

No provision has been made, nor is it administratively practical with the present budget and personnel of the Department of Commerce, to prevent re-exports of American materials to Eastern Europe by other countries. Also, the United Kingdom and other foreign states have made trade agreements with the U.S.S.R. permitting the export to the U.S.S.R. of materials that we do not want our own exporters to contract for.

The best method to protect against undesirable transshipments would be through the use of navicerts. Failing that drastic procedure, we might arrange for other nations to stop such transshipments from their territories. The bilateral agreements to be made under the European Recovery program would afford an excellent opportunity so far as the cooperating nations are concerned to provide against transshipments.

It is assumed that the Atomic Energy Commission is engaging in what preemptive buying of fissionable materials is possible. It would also seem advisable that the advantages of preemptive purchasing be taken into account in connection with the stockpiling programs.

We have no definite control over the exportation of unclassified technological data, or over the services of individual technicians sent to Eastern Europe. It is felt that the latter problem should be partially dealt with by the State Department scrutinizing closely the issuance of passports to American citizens, and by limiting the grant of visas to foreigners applying for entry to the United States.

In bringing all exports to Eastern Europe under control we have for some months had the full cooperation of all American manufacturers whom we have interviewed. Two main problems are presently presenting themselves: 1. In regard to shipments covered by Export-Import bank loans; 2. Affecting hardship cases where American manufacturers entered into contracts in good faith (and usually a year or more ago) and where they would suffer significant financial losses if licenses were refused.

1. The source text bears the following notation by Secretary of State Marshall: “Discussed at Forrestal luncheon by Bruce and Harriman of Commerce. Prepared by Bruce. GCM. Decision: To have present inter-Dept Committee draft policy for high level consideration. GCM.”
2. Regarding the licensing procedure under reference here, see the Department of Commerce press release of January 15, p. 514.
3. The Second Decontrol Act of 1947, Public Law 188, 80th Congress, 1st Session, July 15, 1947 (61 Stat 321) extended certain emergency powers given to the President under the Second War Powers Act of 1942 required to support the foreign policy of the United States. Some of these emergency powers, having to do with the control of international trade, were to be exercised for the President by the Secretary of Commerce. An Advisory Committee, under the chairmanship of Assistant Secretary of Commerce Bruce, was established to assist the Secretary of Commerce in the execution of these powers. In March 1948, an inter-Departmental body, called the Ad Hoc Subcommittee of the Advisory Committee, was established. The Ad Hoc Subcommittee included representatives from the Department of Commerce, the Department of Agriculture, the Atomic Energy Commission, the Department of Interior, the National Security Resources Board, the Munitions Board of the National Military Establishment, and the Department of State. On March 26 Secretary of Commerce Harriman announced the existence of the Ad Hoc Subcommittee and explained that it was developing policies on the export of industrial materials that would contribute to the war potential of the Soviet Union and its satellites.