693.419/10–449
The Acting Secretary of State to the Secretary of Commerce (Sawyer)
My Dear Mr. Secretary: As a matter of direct interest to your Department, I wish to summarize for your information the results of our recent talks with the British Foreign Minister and his advisers on the question of parallel action by the United States and British Governments to control exports of strategic commodities to China and adjacent areas in the Far East.
You will recall that conversations on this subject have been proceeding with the British since February of this year, and that in June a small technical mission composed of representatives of the Department of State and your Department went to London, at the invitation of the British Government, to discuss the matter on the technical level with British officials. Our position in these conversations was worked out jointly with your Department by representatives of the Department of State, the National Military Establishment, and the Economic Cooperation Administration.
In accordance with this position, we urged the British to cooperate with us in imposing effective controls on exports to China, both from [Page 879] the United Kingdom and from their dependencies in the Far East, of commodities included in our own 1–A and 1–B lists of strategic commodities, for the following purposes: (a) to deny goods of direct military utility to the Chinese Communists, (b) to prevent transshipment via China to the USSR, eastern Europe and North Korea of goods which are being denied to those areas by the United States and western European governments, and (c) to demonstrate western solidarity and ability to control, and if necessary to restrict, strategic goods of key importance to the Chinese economy. We stressed that we did not intend at that stage to restrict exports to China of 1–B goods that could bel justified in terms of normal civilian requirements. In accordance with this view we asked the British to control and exchange information with us on shipments to China of a highly selected list of 1–B items of key importance to the Chinese economy, comprising altogether some fifty items.
After consideration of these proposals, the British Government informed us that it was unable to accept them, but made a counter-offer as follows: (a) they would undertake to impose controls on exports of 1–A items to China, contingent upon the cooperation of other countries which are alternative suppliers, and would also impose similar controls on exports to China from Hong Kong and Singapore; (b) they would agree to “watch the flow” of 1–B items to China and exchange information with us on the trade in these items, enlisting the assistance of the Hong Kong and Singapore Governments in this; (c) they proposed that the United States and British Governments, in cooperation with the Netherlands Government, exercise an informal control over the supply of petroleum products by arrangement with the major oil companies of the three countries.
We believed one more effort should be made to obtain British agreement to our original proposals and therefore asked them to reconsider the question. The subject was held open for further discussions at the recent talks in Washington, which were then being planned, and when Mr. Bevin came to Washington we again raised the matter.
Mr. Bevin and his advisers informed us, however, that they had reconsidered carefully their position but had decided that they would be unable to go further than their offer of last August. We therefore deemed it advisable to accept this offer, but expressed the hope that they would be able in the future to reconsider their position with reference to export controls on 1–B items. It was agreed that the British Government will approach the members of the British Commonwealth, seeking parallel controls by them, and that the United States will approach the Republic of the Philippines. The United States and the British Governments will make parallel approaches to the Governments of western Europe, seeking similar controls by [Page 880] them. We assured the British that the Supreme Commander for the Allied Powers was now controlling Japanese strategic exports to China, and that the United States would undertake to ensure adequate control of transshipments at South Korea. It was understood that the agreement to exchange information with reference to 1–B items implies a commitment to consult each other regarding corrective measures if such shipments, in the judgment of either Government, are proceeding at an excessive level or threaten to become injurious to our common interests.
This Department will take steps to make the necessary approaches to the governments of third countries whose cooperation is required. It is understood that a recommendation is being submitted to your Department through the export control committee system, for the extension of the R–procedure to China and adjacent areas as soon as possible, and the Department of State will support this recommendation and present its views regarding the policies which should be pursued in licensing exports for shipment to those areas.
Sincerely yours,