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

320.2–AC/2–2151

Memorandum of Conversation, by Ward P. Allen of the Bureau of European Affairs, and the Officer in Charge of Economic Affairs in the Office of Chinese Affairs (Barnett)

secret

[Washington,] February 21, 1951.

Subject: Possible UN Sanctions against Chinese Communists

Participants:	Mr. C. A. Gerald Meade, Counselor, British Embassy
	Mr. D. A. Greenhill, First Secretary, British Embassy
	Mr. R. Burns, Counselor, British Embassy
	Mr. U. Alexis Johnson—NA
	Mr. Robert W. Barnett, CA
	Mr. Edmund Kellogg—UNE1
	Mr. David Popper—UNP
	Mr. Maurice Levy-Hawes—BNA
	Ward P. Allen—EUR

A. UK Views.

At the outset of the meeting Mr. Meade outlined UK views on the following aspects of the problem of economic sanctions, stressing that they were informal and had not yet received Cabinet approval.

1. Full Embargo. By this the UK understood to mean the export prohibition on all goods and commodities imposed at the source. They expressed the hope that this idea would be discarded at the earliest possible stage. In the UK view, it would be unrealistic to expect the support of all major countries (mentioning specifically India, Burma and Pakistan as probable dissenters) and they felt that even if all countries did participate it would not achieve the objective since China is not seriously dependent on sea-borne imports. Thus, a full embargo would not alter the course of military operations in Korea, nor deflect the Chinese from further aggressive operations elsewhere. The British Combined Chiefs see the gravest political and military consequences and possible retaliation by the Chinese Communists to any effort to impose and enforce a full embargo.

2. Shipping Controls. The UK feels these would not be effective without the cooperation of all Members which, again, it would be almost impossible to obtain, and they were fearful that the effort to impose such controls would result in greater harm to the UN Members than damage to the Chinese Communists. They pointed out that, for example, the imposition of such controls would undoubtedly result in large scale defections of Chinese sailors from the Dutch and British merchant fleets. This would seriously cripple shipping operations generally, and the probable attitude of India and Pakistan would make difficult the recruitment of their nationals as replacements.

3. Naval Blockade. This would be the only certain way to make a full embargo completely effective. The UK is opposed to it on three grounds:

(a) It could not be legally imposed by decision of the UN (except the obviously impossible decision by the SC under Chapter VII) and therefore any efforts to enforce it would encounter serious legal objections.

(b) Such a provocative form of economic warfare would be vehemently opposed by India and the other Asian States.

(c) It would be likely to lead to military counter-measures by the Chinese and to run the risk of military encounters with Soviet vessels, and thus might well provoke an extension of hostilities.

4. Financial Controls. In the UK view unless a complete embargo is imposed, effective financial controls could not be enforced. The process would be too complicated. We expressed some dissent from this view, pointing out that financial measures could nevertheless increase the effectiveness of a marginally effective partial embargo.

5. On a partial embargo the UK representatives indicated they had no views to express in the absence of some further indication as to US thinking regarding the scope, machinery, etc.

B. US Views.

1. We explained in some detail the background of events which led us to impose a full embargo ourselves and gave the rationale for it along the following lines:

• Since the autumn of 1949 when Communist authority began to replace that of the National Government there have been present within the United States Government two opposed theories which were thought could govern our trade relations with Communist China. One was that maintenance of trade relations represented “a foot in the door” to be exploited, if possible, as a means for influencing Communist China to loosen its ties with the Kremlin and seek some reasonable modus operandi with the countries which had the most to offer and most to gain from mutually advantageous economic relations. The other theory was that Communist China should be penalized, by economic means, for its declared hostility to the West—and particularly the United States—should be deprived of goods which contributed to the success of a regime engaged in programs of internal political repression and foreign aggression. The policy actually adopted by the United States from the autumn of 1949 until March 1950 combined the two theories; goods of strategic value were either prohibited or limited to quantities which represented normal civilian need, and non-strategic goods were permitted to flow freely. Our China trade policy was more liberal than that for other countries in the Soviet sphere. In March 1950, the actions of the Chinese Communist regime had removed the reason for drawing this distinction; thereafter China was treated on the same basis as the U.S.S.R. and the Eastern European satellites. The North Korean aggression in June produced a further tightening of United States export controls; after June all United States Positive List exports to Communist China and North Korea were embargoed. The increasingly apparent dependence of North Korean military potential upon supplies and manpower from the Manchurian hinterland demonstrated, in our view, the wisdom of this decision. The Paris Consultative Group was, somewhat sluggishly, following our line of thought; in July it agreed to take the action the United States had taken in March and placed China on the same basis as the U.S.S.R. so far as its prohibited list was concerned.
• Notwithstanding all these developments, the United States had not abandoned completely the “foot in the door” theory. We awaited, with anxiety and hope, evidence that the Chinese Communists, by their actions, could qualify for more or less normal treatment of our trade with China. Massive Chinese aggression in late November, however, confirmed our anxieties and removed our hopes. Between December 2 and December 17, the United States instituted comprehensive controls over all our economic relations with Communist China; we license no goods whatever for export to Communist China, we prohibit our ships and planes from calling at its ports or carrying any goods destined for its ports, we require offloading of United States Positive List items in transit through the United States jurisdiction, and we have frozen Communist Chinese assets within the United States.
• These steps obviously constituted an abandonment by this Government of the “foot in the door” theory. Several considerations seem to us to have justified resort to the alternative theory, economic warfare. In strictly economic terms the pattern of United States exports was such that to cut them off would, we felt, produce a measurable damaging effect upon the Chinese economy. Over seventy-five percent of China’s raw cotton imports were, for example, purchased from the United States. Cessation of these exports has hurt the Chinese textile industry, which, as is known, is the largest productive component in the modern sector of China’s industrial economy. Second, it was felt that export of multiple use within China—e.g. medicines and chemicals—was certain, under present circumstances, to be fed into the Chinese Communist war machine before being made available for civilian use. To permit this to occur would, we felt, represent collusion in the operations of the Chinese Red Army. Third, it was felt that no political advantage could be realized in Communist China by continuation of a business-as-usual attitude towards trade; on the contrary, it might well engender contempt for American lack of realism with respect to the political and military implications of China’s declared hostility and overt challenge of United States rights and interests and the purpose of the United Nations in Asia. Finally, the indignation developing in the United States, in Congress and among the people, over Chinese Communist aggression was such that legislative action might have been taken had the executive branch of the government not acted promptly to take the steps ref erred to previously.
• The United States policy and action in this field have, of course, resulted from a balancing of the harm which could be inflicted upon the Chinese Communists against the losses borne by the United States through adopting them. From our standpoint there is no question that, on balance, comprehensive economic sanctions against the Chinese Communists were clearly in our national interest. We recognize, however, that in striking this balance other countries may reach different conclusions or may reach our conclusion more slowly than we have done. We do not intend, at this juncture, to insist that other countries do what they are not, voluntarily, prepared to consider in their national interest. However, we cannot see how any country can, under present circumstances, fail to prevent shipments to Communist China of items which serve directly the needs of the aggressive operations being spearheaded by the Red Army in Korea.
• We stated that at an appropriate time in the ad hoc CMC we would want to make a similar exposition of our views. While not agreeing, therefore, with the UK view as to the ineffectiveness of a full embargo to accomplish our objectives, we had nevertheless concluded that under present circumstances the requisite support for such a step would probably not be forthcoming in the GA and stated that we did not therefore now propose to press for it.

2. In response to the UK request for a further expression of our thinking as to a partial embargo, we stated that we would regard as the irreducible minimum a resolution by the GA recommending the immediate imposition of an embargo on petroleum, atomic energy materials, arms, ammunition, implements of war and items useful in the production of atomic energy materials, arms, ammunition and implements of war. We thought it could be left to each Member to determine what commodities would qualify for inclusion in the embargo under this general formula and to apply its own export control to such commodities. The resolution should also contain in our view a recommendation that each Member of the UN undertake not to negate the effectiveness of the embargo applied by other complying States.

With respect to machinery for reviewing the application and enforcement of the embargo, we stated we would favor the establishment of a committee to which all Members applying the embargo would report periodically on the commodities whose export is embargoed by such countries and the types of controls being applied. This committee would review such reports and report thereon, with appropriate recommendations, to the General Assembly. It might be appropriate and less complicated to confer these reviewing and reporting functions upon the special committee established pursuant to the February 1 resolution.

3. In presenting the above points we stressed that they were to be regarded as an irreducible minimum and suggested that we jointly consider whether it might be wise tactics initially to propose a more ambitious program and retreat to this in the face of certain opposition. We also pointed out that the adoption of such a program would in no way replace the steps we are now taking through COCOM and other channels to regulate trade nor foreclose bilateral discussions to obtain more stringent controls on certain other products by certain countries. We would also be free to consult on the interpretation of the phrase “items useful in the production of …”.

The UK representatives, although officially noncommittal, reacted favorably to the above, Mr. Meade remarking he thought the US was being moderate and reasonable and Mr. Burns stating that such a program would not cause insuperable difficulties from the economic point of view. They believed the Foreign Office reactions to the foregoing would be forthcoming by next Monday, February 26th, and we tentatively agreed to meet again at that time.

C. Diplomatic Sanctions.

Mr. Meade indicated that the Foreign Office views regarding imposition of diplomatic sanctions did not appear to have changed appreciably since our previous discussion and we indicated in response to his question that ours had not either, that we still are of the firm opinion that a resolution should be approved to the effect that the Chinese Communists should not be seated as the representatives of China in UN organs and that no country which has not yet recognized the Peiping regime should do so so long as their aggression continues.

1. Acting officer in charge of United Nations economic affairs, Office of United Nations Economic and Social Affairs.