Foreign Relations of the United States, 1951, Korea and China, Volume VII, Part 2

S/S Files: Lot 63 D 1: NSC 104 Series

Memorandum by the Executive Secretary of the National Security Council (Lay) to the National Security Council

secret

Washington, February 20, 1951.

Subject: U.S. Policies and Programs in the Economic Field Which May Affect the War Potential of the Soviet Bloc

References:

A. NSC 104

B. Memo for NSC from Executive Secretary, same subject, dated February 12, 1951

C. NIE–22

The enclosed revision of the “Recommendations on Substantive Measures” (Part II–A of NSC 104), prepared by the Department of State in the light of the discussion at a meeting of the Special Committee on East-West Trade, is transmitted herewith, as an alternative to Part II–A of the original report, for consideration by the National Security Council at its meeting on February 21.

James S. Lay, Jr

[Enclosure—Extracts]

Revision by the Department of State of NSC 104, Part II–A, “Recommendations on Substantive Measures”^*

Export Controls

1. The U.S. Government should, pending further developments in the U.N., continue to prohibit all exports to Communist China, Manchuria and North Korea, but should apply licensing controls so as to permit Hong Kong and Macao to [procure from U.S. sources imports for local uses and for transshipment to non-communist destinations] import from U.S. sources goods for local use and for transshipment to non-Communist destinations on appropriate undertakings that the transshipment of such goods, either before or after fabrication, will not be permitted to Communist destinations.

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7. The U.S. Government, in view of the Chinese Communist aggression in Korea, should continue to press through diplomatic channels and through such arrangements as COCOM, the tin and rubber conferences, etc., for the application of effective controls on exports to China. Its efforts through the United Nations, however, should be directed at achieving agreement on such economic sanctions as can be agreed to by the maximum number of countries; if necessary to achieve a wide measure of agreement in the United Nations, the United States should approve United Nations sanctions less comprehensive than those applied by the United States but the minimum for such sanctions should be atomic energy materials, arms, ammunition and implements of war, petroleum and items useful in the production of arms, ammunition, and implements of war, [economic sanctions by the maximum number of countries; if necessary to achieve a wide measure of agreement, such sanctions may be confined to a list of goods including atomic energy materials, arms, ammunition and implements of war, petroleum, and industrial equipment useful in producing war materials.]

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1. Proposed deletions are shown in brackets, and proposed additions by underlining. [Footnote in the source text. Underlining printed here as italics.]