Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

400.009/7–551

The Assistant Secretary of State for Economic Affairs (Thorp) to the Assistant Executive Secretary of the National Security Council (Farley)¹

confidential

Washington, July 5, 1951.

My Dear Mr. Farley: The Department of State has certain responsibilities in the administration of Section 1302 of Public Law 45. These responsibilities are concerned primarily with the problem of discussion and negotiation with those foreign countries now receiving economic and financial assistance from the United States. I should like to report to you on the substance of these discussions which have been held up to the present date indicating what the Department has done, what the initial negotiations with foreign governments have been and what problems seem to be most pressing on the basis of the experience so far.

The bill containing the Kem Amendment was signed by the President on June 2. The signature was accompanied by a message setting forth objections to the Amendment and stating that its sweeping provisions will require the National Security Council to make broad use of the exception provided.

The list of items which other countries would be required to embargo under the Kem Amendment as a condition of aid was certified by the Secretary of Defense to the Administrator of the Economic Cooperation Administration on June 5. In his letter Secretary Marshall pointed out that in view of the urgency of the time schedule imposed by the Amendment, he incorporated by reference the contents of several lists which previously had been promulgated for other purposes by the Government. He also pointed out that the commodities enumerated on the list varied in their strategic importance to the trade of the Soviet Bloc and that only a portion of the items have been regarded by this Government as of primary strategic importance.

During the week of June 11 the Department of State called in the representatives of all countries receiving aid, except Ethiopia, Iran and Syria, and asked them whether their governments could meet the requirements of the Kem Amendment before the deadline of June 18 provided in the bill. The foreign representatives were provided with a copy of the Kem Amendment, the President’s message and a press release issued by the Economic Cooperation Administration describing in general terms the scope of the embargo list certified by the Secretary of Defense. Copies of the list were transmitted subsequently as soon as they were available.

The representatives of a number of the smaller countries indicated tentatively that their governments might be able to meet the certification requirements of the Kem Amendment. These countries included Spain, Portugal, Yugoslavia, Iceland, Ireland, Formosa, South Korea, Thailand, the Philippines, Israel, Liberia, Costa Rica, Haiti, Honduras, the Dominican Republic and Nicaragua. The representatives of other countries stated either that their governments probably would not be able to certify or that no reply could be given until the list had been received and the matter had been given full consideration by the appropriate governmental authorities.

On June 14 the National Security Council approved a general interim exception under the Kem Amendment which temporarily excepted all countries from the provisions of the Amendment pending examination of the situation of each country. This interim exception was necessitated because of the impossibility of obtaining certification within the time schedule specified by the Amendment. The alternative of suspending aid would seriously have endangered the national interest. It was not intended in any sense as a suspension of the Amendment. Individual country studies were commenced immediately. Special individual country exceptions for Norway and Austria were made by the National Security Council at the same time. These exceptions were transmitted to the six committees of the Congress referred to in the Kem Amendment and were published by the White House on June 15.

Work has been initiated on evaluating the trade of additional countries for the purpose of determining whether it is in the security interest of the United States that assistance be continued and that the interim exception be replaced by a specific country exception. A number of these country evaluations are being prepared for early consideration by the National Security Council. It is intended that the trade of all 60-odd countries receiving assistance would be reviewed within 90 days. This will require a schedule of three or four studies a week. It is planned that the evaluation of Western European countries will be made following negotiations planned for July.

It appears to us that the program for future action under the Kem Amendment will require some expansion of negotiation with other Governments. Tentatively, the general plan for such discussions appears to us as follows:

(1) Western Europe. There is already very close similarity between the lists of primary strategic items whose export to the Soviet Bloc is prevented by countries of Western Europe and the list which is observed by the United States. An effort will be made to bring into virtually complete conformity the Western European lists and the United States lists with respect to items of primary strategic importance. There will also be an effort to establish tighter quantitative controls over items of secondary strategic significance. Although it is clear that the Western European countries generally embargo the shipment of arms, ammunition and implements of war to the Soviet Bloc, it will be necessary to clarify the status of their control in view of slight variations in the coverage of the Munitions List in effect in various countries.

These negotiations will be undertaken on the most urgent basis early in July, and Mr. Harold F. Linder, Deputy Assistant Secretary of State for Economic Affairs, has gone to Paris to supervise the discussions.

(2) Latin America. Early in June instructions were sent to our missions in the other American republics to request the other governments concerned to adopt security export controls parallel to our own. This action was taken pursuant to a resolution on economic defense adopted at the recent consultations of American Ministers held in Washington. The institution of extensive export control systems in the other American republics may take some time. Therefore, we plan to move promptly to request the other American republics to institute additional selective embargoes (certain items are already under control) on items of high strategic importance which are of significance in their trade with the Soviet Bloc. If this can be accomplished, the security significance of remaining Latin American trade with the Soviet Bloc will be negligible.

(3) Near East and Far East. The countries in these areas represent a variety of situations, which are particularly difficult with respect to the so-called neutral areas. In certain cases it will be possible to obtain quite complete cooperation. In other cases it will be extremely difficult to do so. Discussions with these countries will probably have to be undertaken primarily on an individual bilateral basis.

We will continue to keep you informed as to the progress of further discussions under Section 1302.

Sincerely yours,

Willard L. Thorp

1. Drafted by Wright.