693.9431/6–449: Telegram

The Consul General at Shanghai (Cabot) to the Secretary of State

1989. Consul General Shanghai cordially concurs undesirability rigid procedures, Deptel 331 to Peiping, repeated Shanghai 1070, May 27, but suggest frequent reference inquiries for specific purchases to Consulate Generals China (Deptel 343 to Peiping, repeated Shanghai 1087, May 31) even when directly initiated with SCAP or private firms Japan in order determine legitimacy end use.

On basis Consulate General’s experience handling specific commerce positive list inquiries here, we question validity SCAP objections stated first paragraph Deptel cited. British, other foreign firms, accepted without question our local inquiries re end use for specific imports USA. We feel that it is important to bring home to Communists at every suitable opportunity situation which will clearly show them that they are seriously prejudicing their own interests by ignoring US Consulate Generals.

Regardless possibly fictitious character short supply or competitive demand arguments for individual purchases, we therefore believe end [Page 988] use inquiries should be exploited. Whenever inquiries made by Communists direct or their behalf are serious, we doubt whether friendly end use inquiries in China would cool them off or divert trade other channels. Communists evidently very discriminating in types commodities they purchase abroad; we doubt if they would object reasonable end use inquiries and controls.

Pending development Communist trade exchange controls, banking regulations, tariff schedules expected soon here, Consul General suggests deferment application Eastern European export control procedures. If any publicity is to attend this move, Consulate believes it should be timed to coincide with some Communist move to which we can justifiably take exception, and not taken otherwise. In this way, Communists will be reminded, without our being committed to inimical action, that we have means of being disagreeable if they choose to be.

Consul General orally informed British Deputy Commissioner Customs that Customs being extensively consulted in formulation trade control tariff policies and that no changes in Customs tariff contemplated here during ensuing 10 days, leaving GATT77 tariff rates unchanged. In view apparent Communist acceptance Customs’ expert advice, Hinke is furnishing Customs with unsigned memo containing table Shanghai declared exports USA 1948, comparing regular tariff and GATT rates along lines Deptel 1070, May 2778 as well as set UN79 publications re GATT for Customs’ use. Deputy Commissioner aware Chinese Customs representatives now at Annecy and hopeful Communists here will not abrogate GATT tariff rates.

Sent Department 1989; repeated Nanking 1089, OffEmb Canton 627, Peiping 164. Department pass Tientsin as 65.

  1. General Agreement on Tariffs and Trade, signed at Geneva, October 30, 1947, Department of State, Treaties and Other International Acts Series No. 1700, or 61 Stat. pts. 5 and 6.
  2. See telegram No. 331, May 27, 5 p. m., to the Consul General at Peiping, p. 985.
  3. United Nations.