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

S/S–NSC Files: Lot 63 D 351: NSC 69 Series¹

The Secretary of Commerce (Sawyer) to the Executive Secretary of the National Security Council (Lay)²

top secret

Washington, April 25, 1950.

My Dear Mr. Secretary: I am attaching herewith a memorandum addressed to the National Security Council and request that it be given very prompt attention.

The matter discussed in the memorandum lies at the very heart of our export control policy. For many months we have urged the need for bringing Western European countries into line with our embargo and restrictions. This has not been accomplished. The beneficiaries have been Russia and manufacturers in Western Europe and the United Kingdom. The sufferers have been American manufacturers and anti-Communist security.

This question is to be explored extensively at meetings early in May, both in Paris, by the Paris Advisory Group, and in London, by U.S. and U.K. representatives. It has been suggested that no instructions go from here until these meetings have taken place. My feeling is that the instructions should go before the meetings take place. If the result of these meetings conforms to the instructions, no harm has been done. If the result of the meetings is contrary to what the instructions would have been, it will be more difficult and certainly more embarrassing to secure a reversal of the decisions arrived at.

Very sincerely,

Charles Sawyer

[Enclosure]

Memorandum by the Secretary of Commerce (Sawyer) to the National Security Council ³

top secret

Washington, April 25, 1950.

Subject: Export Controls and Security Policy

The United States has reached a critical point in the use of export control powers in the interests of the national security, as a consequence of our inability to persuade the nations of Western Europe to adopt a standard of control as strict as that applied by the United States. The root of the problem is the conflict between the security advantages and the economic cost of export controls.

The National Security Council accordingly is asked to take note of the following:

1. The signatory nations of the North Atlantic Pact can, by a common policy of embargo or strict limitation on the export of certain types of goods to Eastern Europe, materially limit over a period of years the war potential of the Soviet Orbit.

2. The United States for two years has strictly limited its exports of strategic goods to Eastern Europe; this policy has retarded significantly the advancement in the war potential of the Soviet Orbit, and at the same time it has caused a 60% reduction in U.S. exports to Eastern Europe.

3. U.S. negotiations with Western European countries have not persuaded those countries to adopt controls which cut their exports of strategic goods to the Soviet Orbit as deeply or as broadly as the cuts which have been made effective by the United States; in particular, Western European countries have not accepted U.S. standards of control for highly strategic categories on the U.S. 1A List, such as diesel engines, ball bearings, and precision instruments, and have accepted only a very few of the items on the U.S. 1B List.

4. The Western European countries have been reluctant to accept export controls comparable to the U.S. controls because they feel that this action would reduce their trade with Eastern Europe to a point that would impede their recovery. There is also a disagreement within the U.S. Agencies as to the relative weights that should be given to security as compared with recovery objectives. This conflict also seriously affects U.S. policies in Germany and Japan, and the development of a firm U.S. policy toward Communist China.

5. If the present gap continues between U.S. and Western European export control standards it is impossible to control adequately the flow of strategic goods to the Soviet Orbit. To continue a differential standard of control, as between the U.S. and Western Europe, would unduly encourage the selective expansion of strategic industries in Western Europe and would also discriminate unjustifiably against U.S. producers of export goods.

The above situation seriously threatens the national interest. Strengthened efforts should be made to avoid significant contributions to Soviet Bloc war potential, and to lessen the economic dependence of Western Europe on Eastern Europe. Various events have made the military threat from the Soviet Bloc more dangerous since initial U.S. policy on the control of exports for security purposes was established in March 1948. The volume of East-West trade required for recovery is much less than estimated at that time, as evidenced by the recovery achieved with a much lower volume of East-West trade than anticipated. Under present circumstances the potential cost of export controls for security purposes is less than that expected when the previous assessment was made, while the strategic advantage to the Soviet Bloc is greater. Accordingly, the Department of Commerce recommends to the National Security Council:

1. That the National Security Council decide that the United States should make an unequivocal effort to convince the countries of Western Europe that they should bring their control of exports for security purposes to as restrictive a basis as that currently employed by the United States, regardless of the trade losses which might be incurred.

2. That negotiations to achieve this objective should proceed at the highest level, including a presentation by the United States in the forthcoming meeting of U.S.-U.K.-French Foreign Ministers.⁴

3. That all U.S. exports of strategic items to Western Europe, including those under MDAP and ECA, should be screened for East-West trade implications and that the information developed, where relevant, should be used to convince the countries of Western Europe to adopt security controls parallel to those of the United States. In some instances, this may require the delay of U.S. exports of a strategic item to a Western European country where that country would not agree to security controls over that or related items.

4. That the National Security Council give recognition to the injustice of export restrictions on American business which are not being applied to Western European competitors, even though the reasons for restriction are equally valid.

1. Lot 63 D 351 is a serial master file of the National Security Council documents and correspondence and related Department of State memoranda for the years 1947–1961, as maintained by the Executive Secretariat of the Department of State.
2. This letter and the enclosed memorandum were circulated to the members of the National Security Council as document NSC 69, April 26, 1950, entitled “A Report to the National Security Council by the Secretary of Commerce on Export Controls and Security Policy.” NSC 69 was circulated to the Council under cover of a note of April 26 by Executive Secretary Lay, not printed, indicating that the report had been placed on the agenda of the next regularly scheduled Council meeting on May 4. At the direction of the President, the Economic Cooperation Administrator had been requested to participate in the Council’s consideration of the matter in addition to the Secretary of the Treasury and the Secretary of Commerce.
3. The S/S–NSC Files, Lot 63 D 351, NSC 69 Series, includes a copy of a 14-page memorandum (with 12 pages of appendices) from the Secretary of Commerce to the National Security Council, dated May 2, and entitled “Supplementary Statement on Export Controls and Security Policy” which the Secretary apparently left at the Council at its May 4 meeting. The same files also include a virtually identical memorandum dated May 2 and labeled “Memorandum for the Secretary.” A handwritten notation on the second memorandum indicates that it was left with the Council on the morning of May 4.
4. Secretary of State Acheson was scheduled to meet with British Foreign Secretary Bevin and French Foreign Minister Schuman in London in the second week of May to discuss a wide range of global issues. Acheson, Bevin, and Schuman were also to head their respective delegations at the Fourth Session of the North Atlantic Treaty Council to be held in London beginning May 15.