Memorandum by the Deputy Assistant Secretary of State for European Affairs (Bonbright) and the Assistant Secretary of State for Far Eastern Affairs (Rusk) to the Secretary of State
Subject: Reply to British Aide-Mémoire of February 11 regarding United States Exports to Hong Kong
United States economic sanctions for China have created economic difficulties for Hong Kong which the British believe endanger the [Page 1937] safety of the Colony. The British Foreign Office and the Government of Hong Kong have evolved a formula for making possible more liberal treatment of United States exports for Hong Kong without seriously impairing the effectiveness of our embargo on exports to Communist China.
We believe that the foreign policy implications of the Hong Kong problem justify acceptance of the British formula, with slight modifications, as a modus operandi for the Commerce Department. The Commerce and Defense Departments disagree.
Efforts have been made at the working level to reconcile State and Defense-Commerce views as to what reply should be given to the British Embassy to its Aide-Mémoire and how to state our Hong Kong trade policy within the context of the NSC Staff handling of NSC 104 (Report to the President on U.S. Policies and Programs in the Economic Field which may Affect the War Potential of the Soviet Bloc). It is now obvious that unless our differences can be worked out through an exchange of letters between the Secretaries of State, Commerce, and Defense, the matter will require decision in the National Security Council.
The attached letter contains a full rationale for the position which we believe the United States Government should take on this matter.
It is recommended that you sign the attached letters to Secretary Sawyer and Secretary Marshall.2