400.119/9–850: Telegram
The Secretary of State to the Embassy in the United Kingdom
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1290. Excon. No text available Sawyer “off-record” speech to Natl Sales Executive Assoc Sept 7, urtel 1466 Sept 8.1 Wall St Jour art Sept 8 states “Exports some strategic materials to friendly nations will no longer be permitted if those nations ship these or ‘similar’ commodities to Soviet Union or its satellites”. Art further speculates new Commerce policy will be used as “club” to persuade W Eur countries cut down their exports strategic materials to Sovbloc. NY Times story [Page 185] Sept 8 states “US will not grant export licenses for shipment critical goods or materials to nations which either transship such goods to Iron Curtain countries or send similar products of their own production to Russia and her satellites, Sec Commerce said today”. Also said wld be unfair to US business to prevent selling goods to Russia when other countries selling same goods freely to Soviet Union.
Subcomite of House Comite Interstate and For Commerce commenced hearing Sept 6 and 7 on “granting export licenses for critical materials and policies pursued by Govt Depts with respect thereto”. Will continue Sept 12. These hearings have devoted primary attention to case molybdenum transshipment.2 Transcript record of Sawyer testimony Sept 6 reads “As far as transshipment is concerned, my instructions are that we are not to license for export from this country shipments which we have reason to expect are, or wld be, transshipped or where similar material might be shipped by the country getting the shipment. We have issued instructions that we are to stop shipments of our goods where we believe there is a shipment of similar goods; even though not the original shipment, we won’t issue licenses”.
So far as can be ascertained now, there has been no formal change in export licensing procedures or in existing process interdepartmental consultation re licensing. Foll is prelim clarification Sawyer statement. Statement may mean:
- (a)
- Denial export IA or IB item from US to W Eur country if there is reason anticipate direct transshipment to Sovbloc.
- (b)
- Denial export IA item from US to W Eur country if identical item, manufactured in W Eur country, exported to Sovbloc.
- (c)
- Denial export IB item from US to W Eur country if identical item, manufactured in W Eur country, has been exported to Sovbloc, or at least reduction of US IB export by amount commensurate with W Eur export same item to Sovbloc.
Appears Sawyer’s intention include (a) and (b), but not so clear that (c) intended. Latter implied since one version statement and Comite terms reference is to “critical” materials which wld include such IB items as copper. There shld be no problem re (a), and since W Eur countries have agreed to most US IA items, there might not be too serious impact from (b). (c) wld provide more serious problem, and if concept “similar” rather than “identical” included impact wld obviously be more serious. Shld be noted statement does not appear have direct implication denying capital equipment from US for manufacture IA or IB item in W Eur (such as ball bearing machinery), but might include situation where IA or IB material from US incorporated in end product exported from W Eur to Sovbloc.
[Page 186]Extent to which pre-existing contracts wld be taken into account not clear. This matter also queried urtel 1427 Sept. 6.3 US has never assumed obligation permit shipment items already under contract in announcing export controls. Fulfillment many contracts was interfered with at time US export controls instituted in 1948, and only in few cases were appeals granted on basis serious hardship to co concerned. Only exemption included in announcement items for addition Positive List has been statement in some but not all instances exempting shipments “which were on dock, on lighter, laden aboard an exporting carrrier or in transit to a port of exit pursuant to actual orders for export prior to date items put on list”. This is exemption in favor shipment actually commenced, but not based on mere existence contract.