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

320.2–AC/9–1451

Memorandum by the Deputy Director of the Office of Chinese Affairs (Perkins) to the Deputy Assistant Secretary of State for Far Eastern Affairs (Merchant)¹

secret

[Washington,] September 14, 1951.

Subject: Possible Bases for Extending UN Embargo on Trade with Communist China

Problems:

1. The effectiveness of the selective embargo on trade with Communist China, adopted under the UNGA Resolution of May 18, 1951, is considerably impaired by the limited control exercised over vessels trading with Communist China, including both those flying the flags of countries which have supported the Resolution and those which have not. Bi-lateral approaches to friendly countries have produced results in some cases, but this means has now been more or less exhausted and multilateral agreement is urgently required.

2. Efforts to control vessels trading with Communist China, which are believed to be carrying goods embargoed under the UN Resolution could be enhanced by more adequate controls over the bunkering of such vessels in ports of friendly countries. The two major American oil companies engaged in bunkering vessels trading with the Far East have adopted strict controls on vessels trading with Communist China, but their efforts are often defeated by the lack of a similar control by other oil companies or, in some cases, by the opposition of the authorities in the ports of call. Bi-lateral approaches by the United States in this respect have obtained only partial results and must, therefore, be supplemented by a multilateral agreement.

3. The lists of items embargoed by various countries under the UN Resolution do not cover part of the trade with Communist China in goods which may be of strategic importance to its war effort. Many of the friendly countries report that they embargo a considerably larger list than is called for by the UN Resolution but a further expansion of the items embargoed by a number of countries is necessary and, for that purpose, constant multilateral, as well as bilateral, negotiations are required.

Recommendations:

1. The United States delegate to the UN should propose a meeting of the AMC to examine the reports submitted by States on the measures taken in accordance with the UN Resolution of May 18, 1951, and to submit a report to the GA with the recommendation that the control exercised by States under this Resolution with respect to the embargo on certain categories of shipments to the areas under the control of the CPR and NK authorities, should be extended to prevent vessels flying their flag from carrying such shipments to those areas.

2. The United States delegate to the AMC, in the event of the adoption in the AMC of the above recommendation, should propose, as a corollary to such an extension of control, the denial by States of bunkers and port facilities in general to all vessels believed to be carrying to the areas under the control of the CPR and NK authorities any of the goods embargoed by such States under UN Resolution 500 (V) of May 18, 1951.

3. Except in the event of a definitive breakdown in the truce negotiations with the Communist Chinese and North Korean authorities, it does not appear necessary, in addition to the present discussions in COCOM, to refer to the AMC the question of additional items to be included under the selective embargo by States on shipments to areas under the control of the CPR and the NK authorities.

Discussion:

1. The United States prohibits vessels flying its flag from entering Chinese Communist ports or transporting any goods which are believed to be destined for Communist China. (Tab A)

The National Chinese Government also prohibits, of course, all shipment of commodities to Communist China (Tab B). Danish ship owners have agreed not to charter vessels for the China trade. The Greek Government has placed in force a bill prohibiting the chartering of Greek vessels for transporting items embargoed under the UN Resolution. Honduras prohibits all vessels flying its flag from calling at Communist Chinese ports and from transporting materials which might serve their war efforts. Italy prohibits its public vessels (85% to 90% of the total) from loading strategic materials bound for Communist China. Liberian vessels are prohibited, except by written approval, from carrying any of the goods, embargoed under the UN Resolution, to any place in the Soviet Bloc, including China. The Netherlands has given assurances that its vessels will not trade with Communist China. The Norwegian Government has taken steps to prevent Norwegian ships from transporting to Communist China the goods embargoed by it under the UN Resolution. Panama prohibits any vessels of its national merchant marine from putting in at Communist Chinese ports.

The shipping controls imposed by these countries should make it possible to prevent a large part of the trade with Communist China in the goods embargoed under the UN Resolution; Panamanian vessels, alone, made up, in fact, a considerable proportion of the friendly vessels engaged in such trade. Vessels carrying the flag of several other friendly countries, including a large number with UK registry, still constitute, however, an important loophole in controlling the trade with Communist China. In addition, many of the vessels registered with Panama and other countries which prohibit their carrying strategic cargo consigned to Communist China, may be successful in transferring to the flag of one of the countries which do not impose such a prohibition and thus defeat, in part at least, the efforts which have been made so far to prevent the carriage of such goods on those vessels.

In the preparations made by the Department in respect to the AMC meeting which led to the adoption of the Resolution of May 18, consideration was given to shipping controls as a technique to enforce the selective embargo. As it was believed difficult to obtain wide agreement in applying such controls, it was recommended, however, that, in the interests of securing as wide agreement as possible to acceptance of the principle of an embargo, the Resolution should provide that each Member should apply such of its own controls as it deems appropriate. The experience of the United States, it was stated, had shown that where the United States considers application of controls in particular cases to be of vital importance, such cases can be handled most effectively through private ad hoc diplomatic discussion.

The United States has since approached a number of friendly countries in regard to the possibility of their prohibiting the carriage to Communist China of goods embargoed under the UN Resolution, and in several instances, such as with Panama and Liberia, has been successful in obtaining their full cooperation (Tab C). With a number of other friendly countries, however, bi-lateral discussions have proved of no avail, and it has either been stated outright or become evident that these countries are prepared to consider the matter further only on a multilateral basis, if at all.

Actually, the problem is already being discussed in COCOM (Tab O), but if world-wide action is to be taken, it would appear that the matter must be brought up in the AMC as well (Tab N). To obtain multilateral agreement with the remaining friendly countries which have not adopted shipping controls, would require extensive negotiations, but with the recent agreement of various individual countries and the CMC (Tabs F, G and H) with the United States position Tabs D and E) that shipping controls are an essential technique in the multilateral application of economic sanctions, it may be expected that the AMC, and subsequently the GA, will agree to extend, in this way, the effectiveness of the selective embargo adopted under the UN Resolution of May 18, 1951.

2. The adoption of shipping controls by the UN would be effective only in so far as the vessels of friendly countries are concerned. Any attempt to prevent the vessels of non-friendly countries from carrying to Communist China the goods embargoed under the UN Resolution, would, short of force, have to involve control over the goods and services of friendly countries, on which these vessels are dependent. Most important among these are the port facilities afforded by maritime countries, and especially bunkering.

The United States itself has not undertaken to deny port facilities and bunkers to vessels trading with Communist China, although a draft order was prepared along these lines in the Department of Commerce on May 31, 1951. The two major American oil companies operating in the Far East (Stanvac and Caltex), however, forbid the supply of bunkers to satellite vessels proceeding to Communist ports (Tab I).

The controls exercised by other oil companies and by the authorities in Far Eastern ports are, for the most part, very limited (Tabs J and L). The Shell Oil Company has indicated a willingness to deny bunkers to vessels carrying to Communist China goods which are embargoed under the UN Resolution, but it is tied down by contracts, overruled by the local authorities in some ports, and does not have the support of the British Government, which states it has not yet formulated a firm policy in this regard.

The United States has taken the position in both bilateral discussions and in the UN CMC (Tabs J and K) that each State should exercise control over the bunkering, ship repairing, and other shore facilities available in its territories for use by merchant ships, and deny these facilities to the ships of an aggressor or, where deemed desirable, to the ships of non-cooperating States. It was agreed in the UN CMC (Tab H) that the “denial of bunker fuels for ships and aircraft, denial of port and repair facilities, and denial of free port benefits can and should be resorted to where necessary to reinforce shipping controls against an aggressor or those assisting an aggressor”.

If action is taken within the AMC with a view to imposing controls on vessels, which may be carrying to China goods that are embargoed under the UN Resolution, it would appear from the foregoing that the denial of port facilities and bunkers to such vessels would be agreed to by the AMC as a necessary corollary.

3. The United States and a number of other friendly countries permit no exports whatever to Communist China (Tab M). Also, a number of other friendly countries embargo various items which they consider are in addition to the categories listed in the UN Resolution of May 18. Some of these countries, which constitute the primary sources of supply in the free world, meet frequently in COCOM to discuss the addition of other items to their embargo lists. The progress in this respect appears to be satisfactory, and, unless there were a definitive breakdown in the truce talks with the Communist Chinese and North Korean authorities, it would appear that it is not necessary to refer the matter to the AMC for further action.

1. Drafted by Harrison Lewis of the Office of Chinese Affairs; sent also to Edward Moline, Acting Chief of the Economic Defense Staff, Office of Economic Defense and Trade Policy; David H. Popper; L. James Falck, Assistant Shipping Adviser, Office of Transport and Communications; Elizabeth Mims of the Petroleum Policy Staff; Ruth Bacon, Special Assistant to the Assistant Secretary of State for Far Eastern Affairs; and William E. Culbert of the Economic Defense Staff. None of the Tabs mentioned in the text are printed, but all may be found attached to the source text in the Department of State files.