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

Department of State Committee Files: Lot 54 D 5

Policy Paper Approved by the Foreign Assistance Correlation Committee¹

[Extract] secret

[Washington,] July 1, 1949.

MAP D–G/31

Existing East-West Trade Restrictions

Problem

To describe existing restrictions on East-West trade, negotiated under decisions of the Cabinet and the National Security Council and under the Foreign Assistance Act of 1948, and to indicate related problems arising from the Military Assistance Program.

Discussion

The State Department and ECA are currently negotiating with ERP participants to get their agreement to impose controls, over exports to countries in the Soviet orbit, similar to controls imposed by the United States. Considerable success has already been achieved in securing similar controls over exports to Eastern Europe of commodities on which the U.S. has placed an embargo for such export.

[Here follow five pages in the source text essentially repeating the substance of paragraphs 2 through 6 of document NSC 46, May 3, 1949. See editorial note, page 110.]

No written agreements are sought from the countries approached because of the necessity of registering agreements with the U.N. The ECA participants have been urged to exchange information with the U.S. on the extent of their export controls to the Soviet orbit. It should be noted that because of the great economic importance of East-West trade to many of the ERP countries, and because of the political strength of the Communists in some of the countries, the negotiation of restrictions extending beyond items clearly of a military nature is a matter of extreme delicacy.

ECA and State have concentrated their efforts on obtaining maximum acceptance of controls over I–A items. Italy and Norway have concurred in embargo of the full I–A list, and the Danes have agreed to control nearly all the items. The Trizone of Germany is at the present time embargoing the full I–A list under licensing control administered by the Joint Export-Import Agency. Measures to enforce such controls have had only limited effectiveness. The procedure for future controls, to be administered by German civilians, has not yet been determined. The Austrian Government has also agreed to embargo the full I–A list. However, the Austrian Government has recommended that in order to establish any effective controls, all exports from the U.S. and the participating governments to the Soviet zone should be carefully screened as to consignee and end-use. The U.S. and British Governments at the present time have instituted such screening procedures. The most serious gap in Austrian controls has resulted from the failure of authorities in the Trizone to screen strategic shipments to the Soviet zone of Austria. (In view of the personal dangers to which Austrian officials concerned with this subject are exposed, it is important that no publicity be given to the Austrian Government’s activities.)

The U.K. has put into effect controls over 128 items out of 163 on the United States list and exchange of technical information and views is continuing on the remainder of the items (including five which the British control only partially). France, the Netherlands, Belgium and Luxembourg have indicated concurrence in the list of items accepted by the British. The French have advised that they are currently controlling these items on a “de facto basis” and both France and the Netherlands are expected to institute fuller and firmer controls in the near future. Portugal, Iceland, Ireland, Greece and Turkey have no trade with Eastern Europe in I–A items and have prevented the trans-shipment of such items through their countries to Eastern Europe. While Sweden and Switzerland admit the necessity for security controls over exports to Eastern Europe, they are unwilling officially to exchange information on the extent of their controls over I–A items.

In addition to the broader safeguards on East-West trade promoted by these negotiations, checks are continually being made by the ECA Controller’s Office of the end-use of ECA-financed materials.

The I–B list has been presented to all of the participating governments, who have agreed to the principle of quantitative controls over these items. A formal procedure for implementing the quantitative control of the I–B list will be established as soon as negotiation of the I–A list has been completed.

Recommendations and Conclusions

1. The current negotiations for the control of exports carried on by State and ECA through established channels are adequate to cover the export of strategic items (i.e., items on the I–A and I–B lists, as amended from time to time). It does not appear necessary to initiate any new negotiations with ERP countries or Canada to secure restrictions over the export of such items.

2. The present U.S. lists of totally or partially embargoed items include substantially all items of interest under MAP. If it is found necessary to include additional items, they may be added thru existing procedures, to the lists, which are under continuous review by the Advisory Committee on Requirements.

3. Agreement should be obtained on an ad hoc basis from non-ERP recipients of MAP to institute controls over their significant exports of military or strategic articles to the Soviet Bloc.

4. Where MAP strengthens the position of the U.S. in its continuing negotiations with the ERP countries, the U.S. should take advantage of this fact thru appropriate channels to bring the negotiations to a successful conclusion and ensure adequate implementation.

5. Where exports of some or all items on the strategic lists are not satisfactorily controlled by some MAP recipient, the FMA Director, in deciding upon the extension of military aid, will exercise administrative discretion in accordance with the best interests of the U.S.

1. Regarding the Foreign Assistance Correlation Committee and the disposition of the document printed here, see footnote 1 to telegram Torep 6118, supra.