Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

460.509/12–450

Agreed Report on the London Tripartite Conversations on Security Export Control, October 17–November 20, 1950¹

secret

[London, November 20, 1950.]

TRI/31 (Final)

London Tripartite Talks Agreed Report to Ministers

a. introductory

Nature of Report

This report represents the agreed result of consideration by officials of France, the United States, and the United Kingdom of the action to be taken to give effect to the minute agreed by the Foreign Ministers of the three countries in New York on September 19th, 1950 (copy attached at Annex A.²).

Method of Work

2. As a matter of convenience it was decided to divide the work into three stages: Stage I to consist of preparatory talks by officials; Stage II to consist of the drawing up by experts of lists of items for control; officials to meet again in Stage III to consider the lists, and prepare a tripartite report for submission to Ministers. A list of the delegates in each stage is attached (Annex B³).

3. In Stage I (October 17th–20th) efforts were concentrated on preparing, in the light of the Ministerial Minute, a directive for the guidance of experts in Stage II. The operative section of this directive is attached at Annex C.⁴ This document is basic to the entire operation covered by this report. It brings out the special points to which the experts were to direct their attention in drawing up the lists for security control; it indicates the criteria to be followed in determining whether items should be subject to embargo, quantitative control, or exchange of information; and it specifies the sectors of industry from which such items should be drawn. Preliminary consideration was also given in Stage I to a number of other points arising out of the Ministerial Minute. These included the question of defence needs (paragraph 4(a) of the Ministerial Minute); the implication of quantitative control (paragraph 4(b)); and exchange of information (paragraph 4(c)); the method of assessing the economic impact of the proposed new controls as a whole; and the interpretation of paragraph 5, which relates to the tripartite implementation of these controls.⁵

4. Experts assembled for Stage II on October 30th and were grouped into a number of technical sub-committees, which proceeded to examine, in the light of the directive, the items proposed by the three countries for control in the various sectors agreed. In addition, a committee of military and intelligence advisers was set up, which worked in close contact with the technical sub-committees, advising on items of which the strategic importance was the subject of disagreement in the latter.

5. The results of the work done by experts in Stage II were considered by officials in Stage III (15th—20th November), when the lists of items for security control were finalised and agreement was reached on all points arising out of the Ministerial Minute. The main conclusions reached by officials in Stage III are set out in Section B below.

b. conclusions of officials

Action required by paragraph 4 of the Ministerial Minute.

6. (i) Defence Needs

Under paragraph 4(a) of the Ministerial Minute, the officials of the three Governments were required also to draw up lists of goods “the export of which to the Soviet bloc should be prevented because they are urgently required for the defence needs of Western Europe.”

The officials agreed that this criterion was of a different character from those governing the lists prepared of goods to be controlled or denied to the Soviet bloc on strategic grounds, although of course in many cases the goods required by Western Europe for defence needs might be of the same character as those to be controlled on strategic grounds.

It was also agreed that the three Governments could not in isolation prepare any comprehensive list of anticipated defence needs, and that this could only be done by the N.A.T.O. Powers in the light of their work on the Medium Term Plan. It is therefore recommended that the task of drawing up the list required to give effect to paragraph 4(a) of the Ministerial Minute should be remitted as a matter of urgency to the Council Deputies of N.A.T.O. in order that the latter may review the position and recommend by what body this task can best be performed.

It is recommended that the deputies of the three Foreign Ministers be invited to concert together with a view to the necessary action being taken.

An account of the action already taken by the three Governments in this field is contained in Annex D.⁶

(ii) Security Controls

Out of a total of 318 items discussed, 74 were withdrawn by the proposing governments. All the remaining items were accepted for various forms of control according to the criteria set out in Annex C. 102 items were agreed for embargo, 73 for quantitative control, and 69 for exchange of information. A list of items agreed is at Annex E;⁶ of items withdrawn at Annex F.⁶ It will be seen that the majority of the items agreed for control fall within the sectors of Metal Working Machinery, Chemicals, Chemical and Petroleum Equipment, and Precision Instruments.

Special mention should be made here of two items, tin and rubber, which, though included in the exchange of information category, are to be treated on a somewhat different basis. These two items present a special problem. Officials were agreed as to the strategic advantages of preventing excessive supplies from reaching the Soviet bloc. There are, however, substantial practical difficulties in the way of effective control of these commodities. Both are sold on open markets and are widely traded by merchants in all parts of the world. They are produced in significant quantities in areas outside the jurisdiction of the Governments now cooperating in the administration of security export controls. The technique for limiting supplies would therefore need careful consideration. Moreover, the restriction of supplies would raise serious economic issues for certain of the participating countries which would require full study. Notwithstanding the above considerations, officials agreed that the three countries should exchange available statistics regarding the export of these items.

(iii) Economic Consequences

Paragraph 4 of the Ministerial Minute concludes with the instruction that, in recommending additional measures of control, officials should take account of their impact on the economy of Western Europe, particularly of any loss of essential supplies and of the means by which such loss could be made good.

It is impossible to measure with accuracy the effects of the proposals described in para. 6 (ii) ranging as they do from embargo to an exchange of information. Moreover, changes in export control inevitably affect the export of a wider range of goods than those directly controlled. The most important factors involved appear to be:

(i) the possible reduction in supplies from the Soviet bloc;

(ii) the increased difficulty of securing settlement of outstanding financial claims;

(iii) the loss of export markets and possible unemployment;

(iv) the general effect on the international trading position of Western Europe.

United Kingdom

Although the United Kingdom has large outstanding financial claims not yet settled, and although the Soviet bloc has been a market of some importance for certain engineering industries, particularly the machine tool industry, its main concern in trading with the Soviet bloc is the procurement of a small number of essential supplies. A detailed analysis of United Kingdom trade with the Soviet is attached as Annex G.⁷ Some decline in direct United Kingdom exports was in any case likely as a result of measures previously taken, and the controls proposed must lead to a further reduction. The order of magnitude of the direct loss in exports resulting from recent decisions about machine tools and from the additions to the security export control list now proposed as £3.5 m. The total reduction, taking account of the wider repercussions, is likely substantially to exceed this figure. Unless the Soviet bloc has to export more to the United Kingdom to cover its purchases in the rest of the sterling area, a reduction in Soviet exports of roughly equivalent amount is virtually certain. Particularly in the case of Poland and Russia there is reason to believe that this will primarily affect deliveries of softwood, of which there is a world shortage. United Kingdom consumption of softwood, of which housing forms the largest part, is at present restricted to 50% of pre-war. Some part of the reduction in Soviet exports might fall on deliveries of grain and other foodstuffs of which some additional supplies could be obtained in dollar markets.

France

It has not been possible in the time available to examine in detail the consequences of the proposed measures for the French economy. A further paper will be circulated later. All four of the factors listed above apply with greater or less severity. Moreover, for France, as for other Western European countries, the political consequences of such measures may present a problem of rather wider significance than the economic data above might suggest.

Western Europe

Officials from the three Governments could not hope accurately to assess the economic impact on other Western European countries. The traditional trade of Western Europe with Eastern Europe has had great influence on the structure of Western European industry. There are commodities such as coal and coarse grains of which other Western European countries need supplies. There are Western European countries for whom increased unemployment would be of serious concern though the prospect of continued economic improvement and the immediate impact of rearmament expenditure should offset this in some degree. To the extent that additional export controls hinder the restoration of East/West trade, Western European countries will compete to a greater degree in the markets remaining open both in the sale of manufactured goods and in the procurement of supplies of raw materials and food.

An overall assessment of the impact of the proposed controls upon Western Europe, in any case, must be a matter of judgement in which there may be legitimate differences of view. It is, nevertheless, clear that the adoption by the countries of Western Europe of the measures now proposed will have an effect sufficiently marked to make it unwise to consider further substantial restrictions on export until the effects of these measures have been more fully observed.

Method of applying Quantitative Control

As stated in paragraph 6 (ii) above, 73 items have been recommended for quantitative control. This form of control is not a new concept; it is applicable to the existing International List II. Officials agreed, however, that a more precise formulation of policy and procedure was necessary if such control was to achieve its object, namely to ensure by agreement between participating countries that aggregate exports of these items did not exceed the level beyond which they could contribute significantly to Soviet war potential. Their conclusions are set out in Annex H.⁸ Briefly, these contemplate some form of pre-shipment control over each item, immediate action over the entire field to hold exports, in general, to the average level over an agreed base period, and later more restrictive action in regard to selected items. The degree of restriction and the selection of items wall be determined in the light of an analysis of available intelligence regarding the supply/demand position in the Soviet bloc and the end-use of the goods in question. Officials agreed that such an analysis should be undertaken at once.

Object and Scope of Exchange of Information

8. Whilst exchange of information about exports to the Soviet bloc is familiar as a procedure directly related to quantitative control, the creation of a separate category for this purpose is a new departure. The object is to ensure that a close watch is kept on items which are of potential strategic significance but about which the information now available on the needs of the Soviet bloc is insufficient to establish the necessity for definitive control. With this object in view, the officials agreed that the three countries should exchange information monthly about the items selected for this category; that they should review such items whenever necessary to determine whether definitive controls should be instituted; and that where there is evidence of an excessive rise in demand, action should be taken at once to restrict further exports.

Action required by paragraph 5 of the Ministerial Minute

9. Officials agreed, after consulting their respective Ministers, that the intention was that the three Governments should institute controls over the items agreed between them without waiting for other countries to follow suit. At the same time, it was recognised that provision would have to be made for the three Governments to review their action if it were to be frustrated in particular cases by the failure of other countries to co-operate. Both points are covered in the agreed statement at Annex I.⁸

10. Experts in Stage II were unable in the time at their disposal to specify the individual items of which control by the three Governments alone was likely to be ineffective. They were, however, able to reach general conclusions on the sectors of industry considered. Particular emphasis was placed on the importance of co-operation by Western Germany, Belgium, Sweden and Switzerland in the fields of Chemical and Petroleum Equipment, Transportation Equipment, and Precision Instruments and Electronics.

11. The method by which the co-operation of other members of the Paris Consultative Group could best be obtained was carefully considered. It was agreed that a full report and explanation of the results of the tripartite discussions should be presented to the members of the Consultative Group for consideration at its meeting on 29th November, after conveying through diplomatic channels some preliminary indication of the nature of the tripartite decisions. A detailed statement of the arrangements contemplated is at Annex J.⁹

c. general commentary

12. The list of goods which countries participating in the Paris Organisation have already agreed for embargo to the Soviet bloc (including China) contains over 100 items; the items agreed for quantitative control number about 50. The totals of additional items now recommended for these two forms of control are 102 and 73 respectively; in addition, 69 items have been recommended for the new category of exchange of information. Whilst a mere numerical comparison between existing controls and those now recommended cannot permit of any accurate measurement of the distance covered in this operation, it does at least indicate that the distance is considerable. To enable tripartite agreement to be carried to this point a good deal of give and take was necessary throughout the discussions. It may be added that this spirit of accommodation was sustained by the hope that, if an agreement satisfactory to all three Governments emerged from the discussions, it might, subject to the necessary flexibility, be expected to prove in the present international situation to be of an enduring character. A relevant point in this connexion is that the items now recommended for control include practically all the items at present pending consideration in the Paris organisation.

13. Owing inter alia to the paucity of economic and military intelligence about the Soviet bloc, it is difficult to assess the damage which will be caused to its war potential. That there would be damage in certain important sectors cannot, however, (assuming at least some measure of co-operation from other members of the Consultative Group) be seriously doubted. For the effect of the recommendations now put forward is two-fold; first, to increase the depth of control in fields such as Metal Working Machinery, which are already recognised as strategic, and where controls are therefore already in force; second, to widen the area of coverage by extending control to items of more general industrial use which contribute to the development of the Soviet war potential in the longer term.

d. summary of recommendations

14. The officials of the three Governments recommend to their Ministers that the three Governments should take the following action:—

(1) Remit to N.A.T.O. action on paragraph 4(a) of the Ministerial Minute as proposed in paragraph 6 (i) of this report;

(2) approve the application to the items listed in Annex E of the controls there indicated;

(3) institute these controls without delay, subject to a right of review as provided in Annex I;

(4) approve the proposals detailed in Annex H for applying quantitative control;

(5) approve the proposals for exchange of information contained in paragraph 8 of this report;

(6) approve an approach to other members of the Consultative Group on the general lines of Annex J.

C[harles] E. B[ohlen]
F[rançois de] T[ricornot de] R[ose]
E[ric] A. B[erthoud]

1. Copies of this Agreed Report were flown from London to Washington on the night of November 20. The source text, which was initialed by the heads of the three delegations, was transmitted to the Department of State as an enclosure to despatch 1424, December 4, from Paris, not printed. In that despatch, Charles E. Bohlen, the Minister in France and the Chairman of the United States Delegation to the London Tripartite Conversations, observed that the principal result of the conversations was the reconciliation of the views of the United Kingdom and France and those of the United States on specific international export controls concerning the Soviet bloc. More progress was made at the London conversations on increasing the number of commodities under international export control to the Soviet bloc by the United Kingdom and France than had been accomplished in the 2 years the matter had been under discussion by the United States with Western European governments. Also, for the first time in more than a year that quantitative controls had been under discussion, a form of tripartite international agreement had been reached.

   The voluminous telegraphic exchange between the United States Delegation to the Tripartite Conversations and the Department of State, together with the formal documents circulated during the conversations and transmitted to the Department as enclosures to despatches from the Embassy in London, are included in file 460.509.

2. Annex A is not printed here. For the text of the Agreed Minute of the United States, British, and French Foreign Ministers, New York, September 19, see p. 187.
3. Annex B is not printed. Charles E. Bohlen served as Chairman of the United States Delegation at Stages I and III of the Tripartite Conversations. Nat B. King served as Vice Chairman of the United States Delegation at Stages I and III and headed the Delegation at Stage II. The Delegation included 19 other officials from the Department of State, the Department of Commerce, the Embassy in London, the Embassy in Paris, the Office of the Special Representative in Europe for the Economic Cooperation Administration, the Munitions Board of the Department of Defense, the Economic Cooperation Administration Mission in London, and the Military Aid Mission in London. The British Delegation, which was headed by Eric A. Berthoud, Assistant Under Secretary in the British Foreign Office, included officials from the Foreign Office, the Treasury, the Ministry of Defence, the Board of Trade, the Ministry of Supply, the Admiralty, and the United Kingdom Delegation to the Organization for European Economic Cooperation. The small French Delegation, headed by Etienne de Crouy-Chanel, French Minister-Counselor in London, for Stage I, and by Francois de Tricornot de Rose, Deputy Director for Economic Affairs of the French Foreign Ministry, for Stage III, included officials from the Ministry of Foreign Affairs, the Ministry of National Defense, and the Ministry of Industry and Commerce.
4. Annex C is not printed. The complete text of the Agreed Directive to the Experts had previously been circulated at the Tripartite Conversations as document TRI/5, October 20, not printed.
5. For a report on Stage I of the Tripartite Conversations, see telegram 2294,. October 20, from London, p. 212.
6. Not printed.
6. Not printed.
6. Not printed.
7. Not printed.
8. Not printed.
8. Not printed.
9. Not printed.