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

Eisenhower Library, Eisenhower papers, Whitman file

Memorandum of Discussion at the 202d Meeting of the National Security Council on Thursday, June 17, 1954¹

top secret
eyes only

June 17, 1954

The following were present at the 202nd meeting of the Council: The President of the United States, presiding; the Vice President of the United States; the Secretary of State; the Secretary of Defense; the Director, Foreign Operations Administration; and the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; the Attorney General (for Item 3); Assistant Secretary Anderson for the Secretary of Commerce (for Items 1 and 2); Assistant Secretary Siciliano for the Secretary of Labor (for Item 5); the Director, Bureau of the Budget; Assistant Attorney General Barnes (for Item 3); Assistant Secretary of Defense Hannah (for Item 5); Walter S. Delany, Foreign Operations Administration; Assistant Secretary of the Army Milton (for Item 5); Herbert N. Blackman, Department of Commerce (for Items 1 and 2); Irving Kramer, Foreign Operations Administration (for Items 1 and 2); General Twining for the Chairman, Joint Chiefs of Staff; the Chief of Naval Operations; the Director of Central Intelligence; Robert Cutler, Special Assistant to the President; the Deputy Assistant to the President; the White House Staff Secretary; Bryce Harlow, Administrative Assistant to the President; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

There follows a summary of the discussion at the meeting and the chief points taken.

1. Disagreed Items in COCOM Negotiations (Memo for NSC from Executive Secretary, same subject, dated June 11, 1954; NSC 152/3; NSC Actions Nos. 1121 and 1130)²

After Mr. Cutler’s briefing of the Council, Governor Stassen called on Admiral Delany to present his report on the status of the current COCOM negotiations. As Admiral Delany was concluding his report, the President, who had been delayed, entered the meeting and took the chair from the Vice President.

Governor Stassen then pointed out his intention to make a further effort to refine the area of disagreement with the British and French, but to hold firmly to the control of such items as the United States believed it essential to avoid building up the war potential of the Soviet Union. He indicated that he would attempt to induce the other COCOM nations to agree to retain these hard-core items on the International Lists for export control and, failing this, to persuade them at least not to delete any of these hard-core items at the present time. Governor Stassen said the task would be difficult, and it might be helpful if the President would speak to his “distinguished guests of next week” on the problem.³

The President directed his first questions to the announced intention of the United States to retain high octane gasoline, jet fuel, and certain other petroleum products on the embargo list. If, said the President, the Soviets are in a weak position on these petroleum products, the more of them they use up in time of peace the better it would be for the free world, always provided that the Soviets are unable to import so much of these products that they can be stored up for use in a future war. The President doubted whether the Soviets could store any great amount of these products.

Governor Stassen pointed out that if you exported to the Soviet bloc all the high octane gas and all the jet fuel that the bloc desired, you would permit the bloc to build up its air forces without diminishing the bloc’s own domestic supply. The President argued that any nation that depended on imports from abroad to maintain its air force would be in very tough shape in the event of war, since you used up fuel so fast in modern war. Accordingly if the Soviets are obliged to import petroleum, they must be in considerable difficulties, and he would be inclined to increase these difficulties by letting them have petroleum products.

Governor Stassen replied that the mere fact that the free world permitted such fuels to be exported to the Soviet Union would not mean that the Soviets would not continue to explore and drill for petroleum in territories which they controlled. Secretary Wilson expressed agreement with Governor Stassen, and said that if these imports were permitted the Soviets might well put their established oil fields on half rations. The President, however, remained unconvinced, and asserted again that if you can get an enemy in a position of dependence on outside sources for scarce and vital commodities, it would obviously be advantageous to continue and make more acute this dependence on imports.

Secretary Dulles inquired about the status of nickel, which was in such short supply in the free world, and was assured by Governor Stassen that this commodity had been kept on the hard-core list for embargo. He said that he was at a loss to explain the British desire to remove nickel from the embargo list, and added that we were also insistent that copper be embargoed. Of the remaining commodities in disagreement, Governor Stassen stated that the United States had reached a point in the negotiations where it felt that it must hold the line, and repeated his hope that the President would make this clear to Sir Winston Churchill. The President replied that he would speak to the Prime Minister, but that he wanted to be sure that when he did so his position was logical. Would it be possible, he added, to get the British to agree to continue the embargo on nickel if we deleted the petroleum products?

Governor Stassen replied that petroleum would pose a difficult issue in Congress. If we were to agree to release jet fuel for export to the Soviet Union, the Administration would almost certainly meet defeat on this point in Congress. He felt it was important that Sir Winston Churchill should know that the United States has decontrolled as many disagreed items as possible, from the point of view both of its strategic interests and the attitude of Congress.

The President said that he realized the seriousness of the domestic political considerations, but he was very skeptical indeed of the validity of our embargo program as a means of protecting our strategic interests. Governor Stassen defended the effectiveness of the export control program from the strategic point of view, and was strongly supported by Secretary Wilson, who feared that any further relaxation of the controls on exports from the free world to the Soviet bloc would put us in the position of actually building up Soviet war potential. He added that as far as he could see, the free world countries got very little that was useful in return for the goods they shipped to the Soviet bloc. The real concern of the free world countries was simply to make money in their transactions with the Soviet bloc.

Governor Stassen indicated disagreement with Secretary Wilson’s last point, and gave as an example the fact that the Norwegians obtained manganese from the Soviet Union in return for the fish that they sent to Russia. The President also disagreed with Secretary Wilson, and said that while our export controls could not actually prevent the build-up of the Soviet war potential they could at least slow up this process. He went on to point out, apropos of the sale of tankers to Russia by Denmark, that these small countries had got to make a living, and in our consideration of export controls we could not ignore the fact of “how do our friends live?” The President also cited the case of Japan and the difficulties that the Japanese were going to experience in earning their living if they were excluded from Southeast Asia and prevented from trading with Communist China. Accordingly, the President concluded that we would have to find out what impact our export control program would have on the free world as a whole. We must recognize the fact that many of these nations live on trade, and we cannot adopt a policy which compels them to remain “cold and hungry”.

Mr. Cutler pointed out that it was the President’s point of view, as just expressed, which had in fact led the United States delegation to agree to delete a considerable number of items from the lists for control. He then asked the Council if it would agree to support the recommendations which were made in paragraphs 11(a), (b), (c) and (d) of Governor Stassen’s written report. The Council agreed to accept these recommendations.

Governor Stassen then said that there remained the problem of timing an announcement of the relaxation in the International Lists for export control, particularly in view of the serious situation in Indochina. Mr. Cutler pointed out that this issue was specifically raised in the next item on the agenda, and suggested that it be discussed at that point.

The National Security Council:

a. Discussed the report on the subject transmitted by the reference memorandum, in the light of an oral briefing by Admiral Delany.

b. Agreed that the United States should proceed for the present along the general lines set forth in paragraph 11(a), (b) and (c) of the report.

c. Noted that, if the results of the ministerial tripartite consultation present a remaining area of disagreement too great for the U.S. to accept, the Director, Foreign Operations Administration, would request the Council to consider further alternative courses of action, including those set forth in paragraph 11(d).

Note: The actions in b and c above subsequently transmitted to the Director, Foreign Operations Administration, for implementation.

2. United States Security Export Controls (Memos for NSC from Executive Secretary, same subject, dated June 11 and 16, 1954;⁴ NSC 152/3; NSC Actions Nos. 1121 and 1130)

After Mr. Cutler had briefed the Council very thoroughly on the contents of the report and had called attention to the views of the Joint Chiefs of Staff, he asked Assistant Secretary Anderson to present the views of the Department of Commerce.

Secretary Anderson said that he could do this very briefly. Commerce favored adoption of Alternative B because of its view that to maintain export controls over products made in the United States which were also freely available to the USSR from the other free world countries, was contrary to the philosophy of the Eisenhower Administration.

Secretary Wilson said that he belonged, along with the Joint Chiefs, to the group which believed that we should continue to adhere to the strictest possible control of exports to the Soviet bloc from any free world country. If in practice, however, we could not get our allies to go along with us on this strict basis, we certainly ought to observe the same standards as the rest of our allies. If we maintained stricter controls than our allies, we would appear to stand out as the special enemy of the USSR, and this would of course cause difficulties between us and our allies. We did not want to create a situation where it would look as though our allies were friendlier and more reasonable to the Soviet bloc, while the United States adopted or maintained a particularly tough attitude.

Secretary Humphrey also expressed the view that the United States should be in a position to sell to the Soviets any commodities that the British were permitted to sell them. We should adopt the principle “whatever they sell we will too.” Accordingly, Secretary Humphrey expressed a preference for Alternative B.

The Secretary of State commented that the various philosophies which underlay the arguments he had listened to remained obscure to him. If it was our theory that we tell Congress that we are going to get more from the Russians than we give, this was palpably false. If it is our theory that we are going to relax on East-West trade controls because our allies need to trade with the Soviet bloc in order to make a living, Secretary Dulles said he couldn’t understand the argument that the United States should likewise feel free to trade and possibly to out-trade our allies vis-à-vis the Soviet Union.

Governor Stassen said that there was certainly a great variety of differing philosophies in support of reducing the number of items on the International Lists, and you could never hope to get agreement on any one of them. He pointed out, however, that if the United States itself refrained from taking advantage of the reduced lists and permitted our allies alone to benefit from the relaxation, we could almost certainly expect them to clamor for still further reductions in the controlled items.

Secretary Wilson commented that he hoped in any case our allies were not going to finance this trade with the Soviet Union on the basis of credits offered to them by the United States. He repeated his view that the United States should retain the right to trade with the Soviet bloc in all the commodities that our allies traded in.

The President said we should put it this way: We will go as far in making concessions as we are required in order to allow our allies to make a living. That much of a concession we must certainly make. But beyond that the United States itself does not want to make profits out of commerce with the Soviet bloc. The President added that the whole problem was so complicated and had so many aspects that he was not really sure precisely where he stood on it.

Secretary Humphrey agreed that concessions must be made to our allies in this matter of East-West trade, and we should try to limit such trade to the maximum feasible extent consistent with the needs of our allies. When that had been agreed upon, however, the United States should trade to the same extent as its allies, if for no other reason than to forestall further attempts on the part of the free world nations to delete further commodities from export control

Mr. Cutler said that the consensus appeared to favor Alternative B.

Secretary Dulles inquired about the category of commodities which the United States would continue to embargo because they raised domestic political problems. Why, for example, were anti-biotics included in this category? Was this a heated issue in the Congress? Secretary Anderson explained that there was considerable emotion on this subject in Congress. While, he pointed out, nothing in the present paper permitted the sale of anti-biotics or any other strategic items to Communist China, there was very little doubt that the USSR was transshipping to Communist China anti-biotics obtained from free world sources.

Mr. Cutler then raised the question of the appropriate timing of an announcement of the relaxation in export controls. In response to statements by the President indicating a belief that no public announcement on relaxation should be made, Secretary Anderson agreed that it would be possible for the United States to employ a “certain vagueness” respecting the relaxation. No specific announcement would be required, and controls or decontrols could be handled by means of the Department of Commerce licensing system. The President said he thought very well of this proposal, but Mr. Cutler pointed out that it did not, of course, cover the cutting down of the lists for international control. The President said that we could not control what other nations did, although we could take care of our own announcements.

Secretary Dulles expressed himself as strongly opposed to any announcement of relaxation of trade controls with the Soviet bloc at a time when the French were in such serious trouble in Indochina. Mr. Cutler said he took this to mean that Secretary Dulles opposed any public announcement until such time as the situation in Indochina was clarified. He pointed out that this was the recommendation in paragraph 10 of the report. Secretary Dulles said that paragraph 10 did not quite cover his problem, since it placed implementation of the relaxed controls and announcement of the relaxation of the controls in the same category. It might prove necessary for the United States to agree to implement the new program of relaxed controls prior to any settlement in Indochina. At least, however, it was not necessary to present any formal announcement that this implementation had begun.

The President suggested that the problem might be met by an announcement of the commodities which remained embargoed, but no reference to the items which were to be decontrolled. Secretary Anderson warned that it would be very difficult to persuade the British to refrain from public announcement of the new policies.

The National Security Council:

a. Discussed the report on the subject transmitted by the reference memorandum of June 11.

b. Adopted the proposed amendments to paragraphs 21 and 23 contained in paragraph 17 of the report, subject to the following changes:

(1) Paragraph 21-a-(1): Change “list” to “lists”.

(2) Paragraph 21-a-(2): Delete the words “and which meet the following criterion: Strategic commodities”.

(3) Paragraph 21-a-(4): Delete.

c. Agreed that it is in the U. S. interest that no implementation or, if implementation becomes inescapable, no formal announcement of a relaxation of international, and subsequently U.S., controls should occur until the situation with respect to Indochina becomes more clear.

Note: Revised pages for NSC 152/3 incorporating the above amendments, as approved by the President, subsequently circulated to all holders of NSC 152/3.⁵ The action in c above, as approved by the President, subsequently transmitted to the Director, Foreign Operations Administration, for appropriate implementation.

[Here follows discussion of the effect on national security interests in Latin America of possible anti-trust proceedings, the five-power examination of the military situation in Southeast Asia, and reserve mobilization requirements.]

1. This memorandum of discussion was prepared on June 18 by Deputy Executive Secretary of the National Security Council Gleason.
2. The memorandum by Lay transmitted the report of June 11, p. 1191. For text of NSC 152/3 as revised, see p. 1207. NSC Action No. 1121 corresponded to the summary appended to the memorandum of discussion at the May 13, 1954 NSC meeting, p. 1159. NSC Action No. 1130 corresponded to the summary appended to the memorandum of discussion at the May 20, 1954 NSC meeting, p. 1167.
3. The reference here is to the visit of Prime Minister Churchill and Foreign Secretary Eden to the United States, June 25–29, 1954. For documentation on the discussions which took place during this visit, see volume vi. At a meeting on June 23, President Eisenhower and Secretary Dulles agreed that the President should avoid detailed discussion of East-West trade during the conferences; the memorandum of their conversation, dated June 23, together with additional pertinent papers, is printed ibid.
4. The memorandum of June 11 by Lay transmitted the report by the NSC Planning Board, June 11, p. 1191; the memorandum of June 16 transmitted the views of the Joint Chiefs of Staff, as revealed in the ensuing discussion, on the report.
5. For the text of NSC 152/3, as revised by the foregoing action of the NSC, see p. 1207.