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

450.6031/5–250: Telegram

The Ambassador in the United Kingdom ( Douglas ) to the Secretary of State

top secret

London , May 2, 1950—5 p. m.

2377. Following are comments of Paris Embassy re Tosec 36 to London, repeated Paris 1898,¹ which was transmitted via London for Bohlen’s conference:

1. Believe time ripe for top level survey US East-West trade policy in light of what has been accomplished to date and to chart course for future. Export controls, and particularly US export controls, are only one facet this problem. Other factors to be considered are:

(a) Importance (if it is important) of East-West trade to economies of Western Europe and Western world as well.

(b) Do USSR and satellites really want to trade with West? Comparatively few successful trade agreements negotiated in 1949 and 1950 between East and West at least raises this question.

(c) If all trade between East and West were halted, or practically halted, what would be effect on West’s need for strategic items from East?

(d) USSR and satellites are severally engaged in state trading. There are indications they are tending toward (probably already are) trading with West as a unit. As this will continue so long as present political situation exists in East, should West (1) consider trading with East as a unit, (2) seek entirely alternative source for imports formerly provided by East, or (3) consider both (1) and (2).

2. Commerce recommendation (a):

(1) This raises above considerations, particularly as it contemplates entire disregard trade loss, an apparent departure from present US policy.

(2) It is extremely doubtful whether there can ever be complete uniformity between US export controls and those of Western Europe because of different local conditions in each PC.

3. Agree with Commerce recommendation (b) that negotiations to further US policy, once determined, should proceed at highest level. We must face fact there is not enthusiasm for present US program by PCs.

4. As to Commerce recommendation (c), it seems clear overall US policy on East-West trade (including US position in ECA) should be coordinated with MDAP and ECA objectives.

5. With respect Commerce recommendation (d), relative importance East-West trade to US and to other PCs cannot be overlooked.

6. With respect State position:

(a) We are not so sanguine as to progress made on transshipment, and think limitations of CoCom as effective forum to enforce US policy must be recognized. In view London’s 2328 to Department April 28, repeated Paris 679, and London’s 2332 to Department, repeated Paris 681,² prospects 1–B negotiations are not rosy on present level of discussion.

(b) It might be that we have not reached limit of voluntary cooperation in our negotiations with PCs. It seems clear that up to present at least US concept of common security interests of the North Atlantic area and concepts of other PCs are not necessarily the same.

(c) Belief in importance entire US program (particularly complete adoption US 1–A and 1–B lists) not shared in Paris organization when basic policy differences arise should not be discounted.

(d) and (e). Agree.

7. Believe following should also be investigated in arriving at overall policy decision:

(a) Has US program and that of PC’s, really affected Soviet war potential? Could it be that further controls would only bring diminishing returns not worthy of the effort?

(b) Are the methods we have used been the proper ones, e.g., US blanket embargo versus British selective controls of key items?

8. Without attempting provide answers to above, Embassy believes entire situation should be reappraised, if for no other reason than to guide Department and Embassy in carrying out the East-West trade functions it has now assumed from OSR.

9. OSR submitting comments separately.³

Douglas

1. April 28, p. 93.
2. Neither printed; see footnote 4, p. 96.
3. The Office of the Special Representative in Europe for the Economic Cooperation Administration (OSR) in April 1950 had been relieved of responsibilities for East-West trade control negotiations (see the editorial note, p. 82). In telegram Repsec 19, May 4, from Paris, not printed, OSR offered comments based on its experience in the field. OSR objected to the Department of Commerce’s suggestions for more stringent multilateral controls but agreed that the National Security Council should reexamine East-West trade policy. OSR doubted that substantial new additions to current control agreements could be achieved in the Consultative Group under present American policy, and felt that an extension of controls was only possible by the use of high-level approaches (450.6031/5–450).