S/S–NSC Files, Lot 63 D 351, NSC 104–Memoranda
Memorandum by the Assistant Secretary of State for Economic Affairs (Thorp) to the Secretary of State 1
Subject: National Security Council Agenda for February 21, 1951 Item No. 4: NSC 102 and Recommendation 2 of NSC 1042
In NSC 102, dated January 19, 1951, the Department of Commerce proposed that all exports to the Soviet Bloc should be subject to licensing, under criteria which would be so restrictive as to be tantamount to an embargo. In our view the Commerce Department proposal would have required the Economic Cooperation Administration to withhold financing under Section 117 (d)* of the ECA Act and would have had a serious effect on our parallel action negotiations with Western European countries.
In NSC 104 the Department of State also proposed that all exports to the Soviet Bloc should be subject to licensing, but that all licenses covering commodities not already on the Positive List should be referred to the interdepartmental committee to determine what action would be appropriate in each case. This recommendation was intended to keep the licensing procedure flexible and to minimize possible undesirable effects upon our negotiations with Western European countries.
We have now reached a compromise with the Department of Commerce which retains the concept of selective control, but which gives the Commerce Department considerable licensing freedom, subject to continuing policy checks by the interagency committee. This compromise is attached as Annex A. Briefly, it involves the establishment of a 1–C list of some 200 commodities, about 50 of which are already under licensing for Western European countries as well as Soviet Bloc destinations. These 50 would be reviewed by the Advisory Committee on Export Policy to see whether they should continue to be under license for Western Europe or whether licensing should be confined to the [Page 1050]Soviet Bloc. Commerce would be authorized to deny licenses for the Soviet Bloc, on any of the 200 items, in excess of minimum quantities, but would report regularly to the Advisory Committee which could recommend more stringent or more lenient treatment in the future. Transfers of items to or from the 1–C list would be made only after review by the Advisory Committee.
Recommendation 2 of NSC 104 has been revised in order to conform with this compromise on NSC 102. This revision of recommendation 2 in NSC 104 is attached as Annex B.
We understand that the Department of Commerce will submit the compromise included as Annex A to the NSC as a replacement for NSC 102, but this is still subject to confirmation.
The Defense Department may wish a policy more severe than that contained in Annex A. In particular, Defense may propose that 1–B items, now “normally denied” for the Soviet Bloc, be placed under absolute and automatic embargo. We feel that it is essential to avoid any agreement in the NSC that 1–B items should be automatically denied. This would establish an embargo of 1-B items requiring negotiation of an agreement by ECA countries to an identical embargo, and denial of ECA assistance in the absence of such agreement.
1. It is recommended that the compromise revision in NSC 102 as contained in Annex A be supported.
2. It is recommended that the Department propose that the revision in recommendation 2 of NSC 104 as contained in Annex B be accepted.
- Drafted by Robert B. Wright, Assistant Chief of the Economic Resources and Security Staff, and cleared with John M. Leddy, Deputy Director of the Office of International Trade Policy.↩
- For texts of NSC 102, of January 19, and NSC 104, of February 12, see pp. 1000 and 1023.↩
Section 117(d) of the Economic Cooperation Act of 1948 (P.L. 472) reads in part as follows:
- “The Administrator is directed to refuse delivery insofar as practicable to participating countries of commodities which go into the production of any commodity for delivery to any non-participating European country, which commodity would be refused export licenses to those countries by the United States in the interest of national security.” [Footnote in the source text.]