The Secretary of Commerce (Sawyer) to the Secretary of State
My Dear Mr. Secretary: The problem raised in your letter of March 22 regarding export policy towards Hong Kong has been the subject of extended discussions among the Departments of State, Defense and Commerce. The three Departments have been unable to find a common meeting ground, and the issue has been referred to the National Security Council as part of the NSC 104 paper. I, too, am anxious to reach a proper solution of this problem.
The difficulty in reaching agreement appears to stem from a difference in approach. The Defense and Commerce position is based on the premise that our embargo on goods to Communist China is sound and that we cannot permit the movement of U.S. goods, directly or indirectly, to Communist China while our military forces are engaged in armed conflict with the Communists. Because of its peculiar position as a major port of entry for Chinese imports Hong Kong is necessarily affected by our Chinese embargo policy.
We in the Department of Commerce fully appreciate the significance of Hong Kong as an outpost of the free world and we recognize the importance of maintaining the highest measure of cooperation between the United States and the United Kingdom. We agree that every reasonable effort should be made to supply Hong Kong with the commodities required for the support of its basic economy. Nevertheless, we feel bound to give the most serious consideration to the evident need to maximize the effectiveness of the embargo upon the shipment of U.S. goods to China. It was in an effort to develop a workable means of achieving these objectives that the Department [Page 1944] drafted the proposed reply to the British Aide-Mémoire which was transmitted to Mr. Rusk by Mr. Miller on February 21st.1
I believe that it should be possible to work out a reconciliation of the views of our Departments. I have accordingly instructed officers of my Department to initiate discussions with appropriate members of your staff for the purpose of working out a reasonable solution of the present differences as rapidly as possible. It appears to me that this is likely to prove the most fruitful line of action and I hope that you will give it every necessary support. Pending the outcome of these discussions, I would suggest that consideration of the Hong Kong issue in connection with the NSC 104 paper be suspended so that the other matters dealt with in that paper can be acted upon without delay.
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