611.9331/7–2649: Telegram

The Consul General at Tientsin (Smyth) to the Secretary of State

562. Reference treatment to which US Consular establishments and personnel in China have been subjected by Communists, without our having been able take effective counter measures, has been serious loss face detrimental to US interests and plays in hands Communist “paper tiger” propaganda. In our opinion, protests as in case USIS5 closing idle gesture which emphasizes our seeming impotence. We believe only way we may possibly make Communists realize they cannot have everything their way is by economic retaliation and suggest following means:

Immediate suspension all agreement tariff rates (ourtel 242, April 15) including GATT concessions.
Immediate invocation subsidy duty penalty provisions (ourtel 496, July 96) and holding up all Chinese exports arriving United States, pending investigation of Consuls each case. We should let it be known that for entry [of] imports Consular investigation necessary; this to deter any idea of Communists about closing Consulates.
Limit export licenses to private firms exporting to traditional private importers in China, namely, petroleum products to SVOC and Texaco7 exclusively, as they established in China and directly representative United States business interests. Limitation on exports to China would have to be worked out with British and other Atlantic alliance states in order prevent US firms losing market to foreign competitors (for example, Communists at present able buy oil products freely in Hong Kong, boiler tubes in Belgium).

Sent Department; repeated Nanking 314, Shanghai 363. Department pass Peiping.

  1. United States Information Service.
  2. Not printed.
  3. Standard-Vacuum Oil Co. and Texas Oil Co.