S/S–NSC Files: Lot 63 D 351: NSC 69 Series
Memorandum by the Ambassador at Large (Jessup) to the Secretary of State 1
| Subject: | Item I—NSC 69 |
| Export Controls Security Policy |
This problem breaks down into two parts. First, U.S. export control policy on which there seems to be no real disagreement except for the special cases of Austria and Sweden. You may wish to put these two cases aside and take up first the second part of the problem which involves our negotiations with our Western European friends. There follows a brief outline along the lines you suggested yesterday.
[Page 178]What do they get?
Neighborhood of 50%, of great importance to West, comprised of:
| Grain |
| Coal |
| Potash |
| Lumber & forest products (pit props) |
Remainder, none frivolous or luxury items—many items in varying quantities—all of economic importance:
| Chrome | Kaolin |
| Manganese | Coal tar products |
| Phosphates | Textiles |
| Magnesite | |
| Foodstuffs, machinery, vehicles, electrical equipment |
What do they give?
| Farm equipment | Wool | } | In Varying quantities |
| Bicycles and automobiles | Textiles | ||
| Coastal and river vessels | Pumps | ||
| Fish and fish oil | Foodstuffs | ||
| Fruit | Dyestuffs | ||
| Watches | |||
| Metals | |||
| Machinery |
Percentages are meaningless
(five minutes of choking)
How do they carry it on?
No self-functioning markets
Must make annual over-all deals which must include sales and purchases worked out country by country and item by item
What they get depends on variety they can offer.
What does Western Europe face if they accept U.S. demands?
We are demanding they cut out one-third of exports to East.
As result would lose much more than one-third of essential imports, perhaps all because no deal.
In fact, they stand to lose vital imports of somewhere around one billion per year—about one-third of ECA.
They feel we are driving them toward full embargo on trade with East and total loss of essential imports.
If U.S. attempted to offset their losses would mean not only necessary dollars to buy essential imports but also some arrangement to absorb their exports and soften economic shock caused by dislocation. Here again percentages meaningless.
All this at a time when they have no adequate defense and a deep feeling of insecurity.
Until they have adequate defense and a sense of security, accepting U.S. demands would mean:
Increased tension with East
Possible provocation of East
[Page 179]War hysteria—loss of confidence
Loss of imports really needed for stability
We cannot base one of major aspects of total situation on premise that we must make people do what we know already they will not do.
We must have practical solution.
Need for speed in settlement
Irritant in our over-all relations including development common defense program
German export control problem most serious in Europe because of German capacity produce, and problem insoluble unless general agreement reached.
Practical solution really means reaching agreement with European Allies.
We should endeavor to gain maximum acceptance our proposals, and settle it soon.
To do so, we may be forced to lower our sights for the time being by not insisting on less important items and proposals.
Do best we can now and review entire matter in six months when Europeans have more defense and sense of security, they might view problem differently.
(World War II experience with economic controls)
- This memorandum was obviously prepared in connection with the August 24 meeting of the National Security Council, the first agenda item of which was the question of export controls and security policy. For the Record of Actions of that meeting, see infra. This memorandum may be a version of an outline of Secretary Acheson’s remarks on East-West trade made during a briefing meeting the previous day (see footnote 1, supra).↩