Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

ECA Telegram Files, Lot W–130, Paris Repto: Telegram

The Special Representative in Europe for the Economic Cooperation Administration (Harriman) to the Administrator of the Economic Cooperation Administration (Hoffman)

secret
priority

Paris, May 20, 1949—9 p. m.

Repto 4322. For State and ECA. Re Ecato circular A–14¹ and Department’s Intel May 16.² Since my return from Geneva I have read reference telegrams. Reeommendation to place scrap on 1A list is, in my opinion, unrealistic and am reassured to learn (Department Intel) that TSC recommends against 1A rating. I am, however, still concerned that original recommendation for 1A rating was submitted. Believe such proposal raises fundamental questions our understanding of East-West trade policy. Have always assumed and continue to believe that US is not engaging in outright economic warfare against Soviet orbit and that US policy based solely on security factors involving relatively short and precise lists of selected strategic items which are not basic to normal peacetime trade. I therefore feel, especially in view US position supporting expansion East-West trade in return for exports to Western Europe, at present ECE session, that placing scrap on 1A list would put US in untenable and contradictory position. Further, I am sure that no participating country would seriously entertain any such US suggestion particularly in view current supply situation.

It must also be remembered that all negotiations involving scrap exports eastward are based upon receipt by ERP countries of items with greater critical importance than volume of scrap exported.

Principal potential scrap exporter to East is Bizonia and there we can watch volume and value relationship [apparent omission].

I recommend against inclusion of scrap on 1B list for the present since its inclusion would be, I believe, misunderstood by our Atlantic Pact associates in Europe. I suggest, however, that the quantity of scrap shipments to the East should be watched carefully and if intelligence shows any movement which would indicate stockpiling, the question should be raised at once with the exporting countries.

It seems clear, considering the price differential, that no scrap will move from the US to Eastern Europe and therefore placing scrap on 1B list to prevent such movement would seem unnecessary at this time.

Sent Washington Repto 4322, repeated Brussels Repto 212, Vienna Repto 295, Frankfurt 282 for Collisson.

Pass Commerce and NME.

Harriman

1. Not found in Department of State files; it apparently reported the same information conveyed in airgram A–72, May 7, to Geneva, not printed. The National Military Establishment had recommended that the Technical Steering Committee of the Advisory Committee on Requirements consider the application of a Class 1A war potential rating to scrap iron and steel (501.BD Europe/5–749).
2. The circular telegram of May 16 under reference here, not printed, reported that the Metals Minerals Task Group of the Technical Steering Committee had rejected the proposal to place ferrous scrap on the 1–A list but had agreed on a 1–B recommendation (501.BD Europe/5–1649).