893.2553/8–450
The Under Secretary of State (Webb) to the Secretary of Commerce (Sawyer)
My Dear Mr. Secretary: I refer to previous consultations between officers of your Department and officers of the Department of State regarding the problem of supplies of petroleum products to China and Korea as it is affected by the present armed conflict in Korea, and summarize below the present status of the question.
On June 29, 1950 the Department of State requested the American oil companies supplying China to suspend for the time being all sales and shipments of petroleum products to North Korea and Communist China from any source under their control. It was made clear to them that the Department wished all such shipments to cease at once even if such cessation meant cancellation of outstanding contracts and possible involvement in subsequent litigation. The companies in question (Standard-Vacuum Oil Company, The Texas Company, China, Limited, and the Cathay Oil Company) gave assurances that they would comply with the Department’s request and did in fact terminate all shipments immediately and cancel all outstanding contracts.
At the same time the Department of State informed the British Embassy of this action and suggested that the Foreign Office make a similar request of the Shell Oil Company, which is the other firm normally supplying petroleum products to China and Korea. Following a period of consultation, the Foreign Office notified the Department of State on July 15, 1950 of the intention of the United Kingdom to shut off the supply of petroleum to China from British-controlled sources and stated this objective would be accomplished by having the British Admiralty requisition all petroleum stocks in the Far Eastern theatre from which supplies had been going forward to China. On [Page 658] July 18 the Foreign Office announced that all petroleum stocks in the theatre were being requisitioned by the British Services for their use in support of the United Nations resolution on Korea. The Department of State is satisfied that this action means the complete cessation of petroleum sales and shipments from British-controlled sources to China, North Korea or the maritime provinces of Siberia. The Foreign Office requested, however, that the United States Government preserve secrecy as to the motives of the action, and it is important, therefore, that United States Government agencies avoid any public interpretation of the Admiralty requisitioning.
- (1)
- Crude petroleum
- (2)
- Motor fuel
- (3)
- Diesel oil (all grades)
- (4)
- Fuel oil
- (5)
- Kerosene
- (6)
- Lubricating oils and greases.
On July 28, the representatives of governments participating in the Coordinating Committee reported the concurrence of their governments in placing these categories of petroleum products on International List I which is now applied by all participating countries to China and North Korea as well as to eastern Europe.
The Department of State is also undertaking to secure the cooperation of other American oil companies known to possess production and refining facilities outside the United States, and will undertake to secure the cooperation of other independent offshore producers important in international trade. Meanwhile, an instruction is going forward to United States diplomatic and consular posts in areas which are potential sources of supply or potential transshipment points, requesting them to watch closely for and report promptly any evidences [Page 659] of transshipment of petroleum products of United States origin or of exports of indigenous petroleum products to the Orient.
As you know, the question of placing under license control to all countries, other than Canada, those petroleum products of the above-named categories not now under such control is being discussed in the interdepartmental export-control committee structure. It would be helpful if the Department of Commerce could take such action at the earliest possible date in order that the Department of State may assure the Paris Consultative Group that the United States is effectively preventing any strategic petroleum products of United States origin from reaching Soviet-bloc destinations, whether by direct or indirect shipment.
The Department of State appreciates the prompt and effective handling of the export-control problem that has been demonstrated by your Department in this emergency situation.
Sincerely yours,