Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

S/P–NSC files, lot 61 D 167, NSC 152 Series

Report for the National Security Council by the NSC Planning Board¹

secret

Washington, June 11, 1954.

United States Security Export Controls

problem

1. To what degree and at what time should U.S. controls over exports of commodities and supply of services to the European Soviet bloc be modified in the light of the reduced international controls which will result from the current Paris list review?

a. Should U.S. export controls be made identical with the controls internationally agreed at CG/COCOM both as to degree and timing?

b. Should the United States continue to maintain stricter and more extensive export controls than those of other COCOM countries, and if so, to what degree?

c. What should be the nature of controls on shipments to friendly countries in order to avoid circumvention and frustration of U.S. controls toward the Soviet bloc?

general considerations

2. NSC 152/3² provided for a “gradual and moderate relaxation” of U.S. controls over exports to the European Soviet bloc, it called for the use of more stringent criteria in the selection of strategic commodities, and it envisaged substantial alleviation of the disparity between the level of internationally agreed controls and the more severe level of U.S. controls especially where the implementation of our controls might weaken the cooperation of our allies in the international economic defense system. At the same time, however, NSC 152/3 called for the control of exports from the U.S. “with a view to avoiding a significant contribution to the Soviet bloc war potential, by limiting or denying commodities and data which have strategic significance, …”³

3. A review of the international lists of strategic commodities is taking place now in Paris. This review, stimulated by British proposals for sweeping decontrol, is resulting in sharp reduction in the internationally agreed lists of commodities. Although the strategic criteria on the basis of which this review is proceeding resemble those applied in U.S. export controls, there is one significant point of difference which has especially marked effects in relation to commodities and equipment used for both military and civilian production. This particular test is whether the item is one “in which the Soviet bloc has a deficiency which is critical in relation to its military capabilities and which it could not overcome within a short period.” The phrase “military capabilities” is being construed and applied much more narrowly than the phrase “war potential” upon which the comparable U.S. criterion is based. The necessity for compromise in the interest of Western unity markedly intensifies this effect and often leads to results which are not defensible from a strictly strategic viewpoint.

4. There were 474 commodity listings considered in the COCOM review. Of these 270 were considered for embargo; 80 for quantitative control; and 124 for surveillance. As of June 11, although an accurate estimate cannot be made, it would appear that the new embargo list will contain a maximum of about 185 items (of which about 55 are still disagreed). We have no assurance that there will remain either a quantitative or surveillance list, but even with such lists the combined total of items controlled short of embargo would at best not exceed 72 items, plus any of the 55 disagreed embargo items which might fall to a lower classification. The revised international lists would thus total about 257 items or slightly more than one-half of the current lists. Aside from a reduction in the number of listings, the controls will be further reduced by a substantial narrowing of the coverage of many of the listings retained.

5. By contrast, the U.S. maintains an embargo (with rare exceptions) against exports to the Soviet bloc not only of all of the 474 items included in the International Lists, but also of an additional 113 items which we have considered of some strategic importance. Moreover, the U.S. requires specific license for all commercial exports sent to the Soviet bloc and in practice has permitted only shipments of a clearly innocuous nature. Furthermore, in order to safeguard against circumvention of controls over strategic commodity exports to the Soviet bloc, the United States generally requires licenses for exports of such commodities to many or all friendly foreign countries and keeps vigilance over them.

6. There has been no widespread expression up to now of a desire on the part of U.S. traders to expand their business with the Soviet bloc. There is, however, a great desire to be able to carry on trade with friendly countries as freely as possible. It is a matter of legitimate complaint by American exporters when they find themselves impaired in their efforts to do business in friendly countries in commodities which are known to be exportable without restraint by those countries to the Soviet bloc. It has been possible to meet this complaint as long as there has been some prospect of bringing the controls of other countries up to the U.S. level. Now that the prospect is reversed, however, this justification is removed. If, in these circumstances, we in the United States continue to treat as strategic those commodities which are not included in the International Lists and which can be obtained by the Soviet bloc from other Western countries, the logic of our position becomes increasingly untenable. Unilateral U.S. controls would not hinder Soviet bloc procurement; they would only hinder American foreign trade.

7. Logically the same argument can be made as to unilateral U.S. controls over shipments directly to the Soviet bloc. Such controls could not be justified on grounds of depriving the Soviet bloc of such materials except where the U.S. has effective control of supply; they would be open to the charge that they are an unnecessary restraint on American business. However, the public attitude toward this trade is not such as to raise an immediate problem in this regard. On the contrary, the attitude of the business community and of the public generally has been unfavorable toward extensive trade with the Soviet bloc and continues, at least up to the present time, to support restrictive controls over all such trade, even in purely civilian commodities.

8. To accept the revised international levels of control toward the European Soviet bloc as U.S. policy would open the way for shipments from the United States of goods which by earlier standards were considered strategic and which would enhance Soviet bloc war potential without justification beyond the fact of sale. Such a policy could not be justified in terms of net security advantage to the United States. It might well lead to severe public and congressional criticism to the effect that the United States is permitting shipment of strategic goods to a potential enemy. This, coupled with U.S. acquiescence in the low level of international controls, might bring repercussions which could well extend to the entire foreign aid and mutual security programs.

9. A major difficulty in the U.S. control position arises from the double standard applied to strategic exports to the Soviet bloc. The Battle Act embargo list is considerably shorter than the embargo list denying exports from the United States to the Soviet bloc. This makes it appear that there are differing judgments within the executive branch as to what items are of strategic significance to the Soviets, and that certain commodities are considered strategic when shipped from the United States, but not when shipped from other countries. A further widening or even a continuation of this disparity will be increasingly difficult to defend or rationalize.

10. It would probably be desirable to announce any major relaxation in U.S. export control policy towards the European Soviet bloc at about the same time that the agreed relaxation of international controls is announced. Generally, it is in the U.S. interest that no announcement or implementation of a relaxation of international, and subsequently U.S., controls should occur until the situation with respect to Indochina becomes more clear.

alternatives

11. There are three major alternatives which should be considered with regard to U.S. export control policy towards the European Soviet bloc.

a. Maintain U.S. controls over only those strategic commodities agreed for international control in COCOM.

b. Maintain U.S. controls as in a above, plus (1) additional strategic commodities which could be effectively controlled from the United States alone, and (2) commodities, whether strategic or not, which present special political problems for the United States (e.g., scrap, petroleum).

c. Maintain U.S. controls as in b above, plus any other strategic commodities, the shipment of which should be controlled to prevent the United States from being the source, even though such commodities are readily available to the European Soviet bloc from other free world sources.

12. It should be possible to reduce the present controls on shipments to destinations other than the Soviet bloc, whichever alternative in paragraph 11 is adopted. The first alternative would permit a greater reduction than the second, and the second a greater reduction than the third. Although the scope of controls would vary, the same general principles would appear applicable as follows:

U.S. controls on shipments to destinations other than the Soviet bloc (requirement for prior specific license) should be maintained, both as to commodities and particular destinations, only to the extent necessary (a) to minimize the risks of unauthorized transshipments, and (b) to avoid the frustration or circumvention of U.S. controls towards the European Soviet bloc and Far Eastern Communist destinations, in accordance with the provisions of para. 23 of NSC 152/3.

13. The first alternative (11–a) would have the advantage of unifying the free world position on trade with the Soviet bloc, and would also remove any apparent discrimination against American foreign trade in this field. It would be consistent with the Administration philosophy of minimizing controls on American business except where required by the national interest. It would make it possible for the U.S. embargo list, the International List and the Battle Act List to be uniform. This alternative would have the disadvantage of permitting U.S. shipments to the Soviet bloc of commodities which we now, or in the future, may regard as having strategic significance for the Soviet bloc. It may be anticipated that such a policy would meet with considerable public and congressional opposition.

14. The second alternative (11–b) would have substantially the same advantages as the first, but also an additional advantage in that controls would be maintained in those cases where the U.S. controls would be meaningful and effective. The U.S. embargo list would probably be larger than the International List or the Battle Act List, but the differences would be readily justified and rationalized.

15. The third alternative (11–c) would have the advantage of avoiding the United States being the source of strategic commodities which would make a significant contribution to Soviet bloc war potential, even though readily available from other free world sources. It would probably have wider support than either of the others from Congress and the general public but not necessarily from the business community. It would not be consistent with the Administration’s philosophy of maintaining only those controls which are clearly necessary and effective in the national interest. It would discriminate without an apparent strategic basis against American business and foreign trade since American exporters would not be permitted to ship goods which the Soviet bloc would be receiving in any event from other free world sources. Maintenance of a wide differential between U.S. controls and those of other free world countries would raise serious domestic questions about a U.S. policy of acquiescence in shipments by other countries of goods which the U.S. considers strategic, and probably create additional problems between the United States and other free world countries. These questions would be particularly pointed towards the Battle Act Embargo List which under this alternative would be significantly shorter than the U.S. embargo list. It might be exceedingly difficult to explain that certain commodities are considered strategic when shipped from the United States but not when shipped from other countries.

courses of action

16. It is recommended that the first alternative (11–a) be rejected, and a choice be made between the second and third alternatives (11–b and c).

17. Adoption of either alternative 2 or alternative 3 would require changes in NSC 152/3. These changes would be the same for either alternative, except that the subparagraph in brackets below would be omitted if alternative 2 is chosen, but would be included if alternative 3 is chosen.

Add the following as subparagraphs to present paragraph 21:⁴

a. Deny or limit, as appropriate, export from the United States to the European Soviet bloc of the following categories of commodities only:

(1) All strategic commodities included on the COCOM international security list.

(2) Such additional strategic commodities as would contribute significantly to the war potential of the European Soviet bloc and which meet the following criterion: Strategic commodities, the U.S. unilateral control of which can reasonably be expected, because of U.S. production, supply or technology, to be effective in depriving the European Soviet bloc of a significant contribution to the latter’s war potential.

(3) Other commodities, whether strategic or not, which raise such special political problems as to warrant U.S. export control to the European Soviet bloc despite the absence of international controls.

[(4) Any other strategic commodities the shipment of which should be controlled to prevent the United States from being the source, even though such commodities are readily available to the European Soviet bloc from other free world sources.]⁵

b. As a general rule, approve for shipment from the United States to the European Soviet bloc commodities not included in subparagraph a, and, where appropriate, remove the requirement of specific licenses for such shipments.

Amend present paragraph 23⁶ to read as follows:

23. a. Maintain U.S. controls on shipments to destinations other than the Soviet bloc (requirement for prior specific license), both as to commodities and particular destinations, only to the extent necessary to:

(1) Minimize the risks of unauthorized transshipments.

(2) Avoid the frustration or circumvention of U.S. controls towards the European Soviet bloc and Far Eastern Communist destinations.

b. In implementing a (2) above:

(1) Limit or deny shipments of strategic commodities to destinations other than the Soviet bloc when such shipments would contribute significantly to the ability of those countries to maintain or increase shipments of identical or similar commodities to the Soviet bloc, and when the limitation or denial will, in fact, significantly affect the supply of strategic commodities to the Soviet bloc.

(2) Do not take this action as a substitute for negotiations or in such a way that it is inconsistent with a cooperative international system of security controls.

1. This report was transmitted to the members of the National Security Council under cover of a memorandum by Lay which stated that the subject was to be discussed in an NSC meeting on June 17; see infra. Also attached to the source text, but not printed, were a staff study and two appendixes. The first appendix listed items for which U.S. control was justified, even in the absence of international control, and the second contained a statement concerning special Battle Act administrative problems.
2. For text as revised, see p. 1207.
3. Ellipsis in the source text.
4. Same as paragraph 20 of NSC 152/2, p. 1012.
5. Brackets in the source text.
6. Same as paragraph 22 of NSC 152/2.