693.0031/5–3149

The British Embassy to the Department of State

Memorandum

The Foreign Office and other Departments of His Majesty’s Government in the United Kingdom have given careful consideration to the [Page 848] Memorandum dated the 21st April from the Department of State concerning the subject of controlling the export of strategic materials (other than arms and military equipment) to Communist China and North Korea. The questions involved have proved to be of considerable complexity and they continue to be under close inter-departmental study. The following comments represent the provisional views of His Majesty’s Government on this proposal and they are presented in the hope that they will serve to explore the broader aspects of the problem.

2. The control of the direct export of strategic materials from the United Kingdom to China and North Korea would present no serious administrative difficulties. Under existing export control orders export licences are required for a specified list of strategic materials for all destinations, although there is provision to allow export of certain of these items without licence to the Commonwealth, United States of America, and to O.E.E.C.30 countries. All that would be required would be the addition of China to the Export Licensing Department’s confidential list of countries for which licences should be refused for security reasons. In addition to those legal powers there is a working arrangement with industry, by which the responsible production departments exercise control over the export of certain strategic equipment that does not lend itself to export licensing.

3. The control of direct exports from the United Kingdom to China would, however, be of no effect unless transhipment at a wide number of points could also be controlled The State Department will be well aware of the large number of leaks which occurred when attempts were made to enforce the arms embargo for Middle East countries. Some of the countries to which strategic materials may be exported without a license would in practice be potential entrepôt centres for re-export either direct or through their overseas territories to China. Apart from the United Kingdom most of the O.E.E.C. countries have not yet imposed controls on exports to Eastern Europe, and the experience of His Majesty’s Government in the working of these controls cannot encourage them in the belief that ready and effective co-operation on the wide scale necessary would be forthcoming in the event of any proposed extension of this system of controls to China.

4. The difficulties in the Far East itself would be very much greater since there are a number of areas there, some of them of great importance, which are traditional centres for entrepôt trade with China. As far as concerns exports from the United Kingdom, His Majesty’s Government would, in the first place, have to delete Hongkong, Malaya and Singapore from the list of those Commonwealth territories to which strategic materials may be exported without licenses under existing regulations. Since these territories have their own requirements [Page 849] of strategic materials a system would have to be devised to ensure that genuine local demands were met. This would present practical administrative problems of considerable difficulty. The local Governments would then be required to ensure that there was no export or re-export of strategic materials to China.

5. Even this, although damaging to Singapore and Hongkong (in its hampering of the swift movement of goods which is essential to the functioning of an entrepôt) would not produce effective control unless similar action were taken to control exports to a number of other possible entrepôt points in foreign territory in the Far East. It is indeed difficult to believe that the placing of a ban on strategic materials when applied only to direct exports from the United States and the United Kingdom and re-exports from Hongkong and Singapore would have much effect on the communist strength. The more probable result would be to divert trade away from Hongkong and Singapore to their more accommodating neighbours.

6. The Foreign Office is not clear whether the State Department is contemplating the control of all the items in the list known as 1(a).31

7. If, in the light of the above assessment of the ability of His Majesty’s Government to co-operate in the imposition of an effective control the United States Government has any concrete proposals to put forward the Foreign Office would be ready to give them very careful and sympathetic consideration. It is the present view of the Foreign Office that any detailed discussion of such proposals could be most effectively conducted at a technical level in London.

  1. Organization for European Economic Cooperation.
  2. List of materials of high military significance.