493.119/6–850

The Secretary of State to the Secretary of Commerce (Sawyer)

top secret

Dear Mr. Secretary: I refer to my letter of February 3, 1950 to you concerning the policy of the United States Government with respect to exports of strategic goods to China and other areas of the Far East, as outlined by the National Security Council paper Number 48/2 dated December 29, 1949. Reference is also made to the Department’s letter of April 28, 1950 to Secretary Johnson with respect to the strategic rating of steel rails, a copy of which was sent to you.

As coordinator of policy under NSC 48/2, the Department of State has recently reviewed the situation in China and has reached the conclusion that our previous interpretation of the export control policies toward Communist China outlined in Paragraph 48g(4) of that paper should be modified along the following lines.

The Department of State now believes it necessary to apply export licensing controls over strategic materials for shipment to Communist China on a more restrictive basis than hitherto, and in general believes that where application of such criteria can be made effective the export of both 1–A and 1–B materials to Communist China should be governed by the same principles that now govern the export of such materials to the USSR and its eastern European satellites. The following paragraphs outline the general criteria which the Department of State believes should apply, and outline the limits of the abovementioned qualification with respect to the effectiveness of the resulting controls.

With respect to the export of 1–A materials, the Department of State now believes all applications for shipments of such materials to Communist China should be uniformly denied, as in the case of applications for shipment to the USSR. Formerly the view of the Department was that exceptions might be made on grounds of the national interest.

With respect to the export of 1–B materials, the Department of [Page 639]State now believes that, with two exceptions, the licensing of applications covering shipments to Communist China should be governed by the same principles and criteria that now govern the export of such commodities to the USSR and its eastern European satellites.

The first of these exceptions relates to the question of the effectiveness of unilateral United States restrictions on exports of 1–B materials to Communist China. Where the denial of licenses to American exporters for export of 1–B materials to Communist China would merely divert the trade to alternative suppliers in the United Kingdom or western Europe, and where those alternative suppliers are known to be supplying substantial quantities of the particular items to Communist China, the United States should continue to license exports of such commodities within the limits of current normal civilian requirements in China, subject to the other licensing criteria laid down in NSC 48/2. When there is no clear evidence that such diversion of trade will take place, either because alternative suppliers are known not to be supplying substantial quantities, or because the United States is the sole or almost the sole source of supply of a 1–B item, the licensing standards governing applications for export to the USSR and its eastern European satellites should apply.

The second of these exceptions is the following. When denial of export licenses for shipment of 1–B materials to Communist China would place American nationals or property in China in serious jeopardy, such licenses should be approved within the quantitative limits of current normal civilian requirements.

It is the view of the Department of State that the adoption of the licensing standards outlined in this letter will result in bringing the export control policy of the United States Government with respect to Communist China somewhat nearer to the general policies followed with respect to exports to the Soviet bloc in general, but that it will still permit the licensing of some 1–B exports on a current normal civilian requirement basis, which may, therefore, make necessary estimates of such requirements.1

Sincerely yours,

Dean Acheson
  1. In a reply dated June 13 (not printed), Mr. Sawyer stated that the requested changes were being implemented (493.119/6–1350).