Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 1

JCS files, 092 Asia (6–25–48)

Note to the National Security Council by the Executive Secretary (Lay)

top secret
NSC 5429/5

[Washington,] December 22, 1954.

Current U.S. Policy Toward The Far East

References:

• A. NSC 5429/2, NSC 5429/3, NSC 5429/4
• B. NSC 166/1
• C. NSC 152/3
• D. NSC 146/2
• E. NSC Action No. 256
• F. NSC 125/2 and NSC 125/6
• G. NSC 170/1
• H. NSC 171/1
• I. NSC 5405
• J. NSC 5409
• K. NSC 5413/1
• L. NSC Action No. 1250
• M. NSC Action No. 1148
• N. Memos for NSC from Executive Secretary, subject, “U.S. Objectives and Courses of Action with Respect to Formosa and the Chinese Nationalist Government”, dated September 28 and October 5, 1954 and NSC Action No. 1235
• O. NSC Action Nos. 1224 and 1234
• P. NSC Action Nos. 1258 and 1259
• Q. NSC Action No. 1233
• R. NSC Action No. 1275
• S. Memos for NSC from Executive Secretary, same subject, dated November 29 and December 20, 1954
• T. NSC Action No. 1292

The National Security Council, the Secretary of the Treasury, the Secretary of Commerce, the Director, Bureau of the Budget, at the 229th meeting of the Council on December 21, 1954, discussed the subject in the light of the views of the Joint Chiefs of Staff transmitted by the reference memorandum of December 20. The Council adopted the changes in the statement of policy contained in NSC 5429/4, which are set forth in NSC Action No. 1292–b, and:

Deferred action on paragraph 5–g pending further consideration by the Secretary of State, in consultation with the Secretary of Defense, and report at the meeting of the Council to be held January 5, 1955. (NSC Action No. 1292–c)

Deferred action on paragraph 7–c, other than the “Majority Proposal” in 7–c(2), pending further consideration by the Secretary of State, in consultation with the Secretary of Commerce, and report at the meeting of the Council to be held January 5, 1955. (NSC Action No. 1292–d)

Requested the Council on Foreign Economic Policy to undertake the study outlined in the “majority proposal” in paragrah 7–c-(2) of NSC 5429/4. (NSC Action No. 1292–e)

The President has this date approved the statement of policy in NSC 5429/4, as amended and adopted by the Council (except paragraphs 5–g and 7–c) and enclosed herewith as NSC 5429/5; directs its implementation by all appropriate executive departments and agencies of the U.S. Government, subject to review in the light of final decisions as to basic national security policy; and designates the Operations Coordinating Board as the coordinating agency.

Accordingly, the enclosed policy supersedes NSC 5429/2; NSC Action No. 1148–b; NSC Action No. 1224–b and NSC Action No. 1234–b; NSC Action No. 1258–c and NSC Action No. 1259–c; Memo for NSC from Executive Secretary, subject, “U.S. Objectives and Courses of Action with Respect to Formosa and the Chinese Nationalist Government”, dated September 28, 1954. All other Far Eastern policies (references B–L, where they are inconsistent with the enclosed statement of policy, are modified, pending Planning Board and Council review and revision of these more particular policies.¹

A Financial Appendix covering the Far East will be prepared for the information of the Council at a later meeting.

James S. Lay, Jr.

[Enclosure]

Statement of Policy by the National Security Council on Current U.S. Policy in the Far Eas²

general considerations

1. The primary problem of U.S. policy in the Far East is to cope with the serious threat to U.S. security interests which has resulted from the spread of hostile Communist power on the continent of Asia over all of Mainland China, North Korea and, more recently, over the northern part of Viet Nam.

2. In its five years of power, the regime in Communist China has established and consolidated effective control over the mainland and has maintained and developed close working relations with the Soviet Union. While there is now no reason to anticipate an early collapse of the regime nor any means of seeing when one might occur, inherently such regimes have elements of rigidity and instability which sometimes produce crises. We should be ready to exploit any opportunities which might occur as a result of inherent internal weaknesses.

3. The task of the United States in coping with this situation is further complicated by:

a. The vulnerability of the non-Communist countries in the area militarily, and in varying degrees, politically, economically, and psychologically, to further Communist expansionist efforts.

b. The deep-seated national antagonism and differing assessments of national interest which divided these countries from each other and severely hamper efforts to combine their collective resources for their own defense and welfare.

c. The intense nationalistic feelings, fed by residual resentments against European colonialism coupled with a widespread feeling of weakness and inadequacy in the face of the worldwide power struggle, which inhibit many of these countries from cooperating closely with the United States.

d. The divergencies on Far Eastern policy with our European allies, principally with respect to our posture toward China, which limit the extent of political and economic pressures which can be maintained against the Asian Communist regimes without divisive effects on the basic United States-led coalition.

Note: In addition to the foregoing general considerations, attention is directed to NIE 13–54, “Communist China’s Power Potential Through 1957,” published June 3, 1954, and NIE 10–7–54, “Communist Courses of Action in Asia Through 1957,” published November 23, 1954.

objectiveS

4. Pursuant to a policy of being clear and strong in its resolve to defend its vital interests, if necessary at the risk of but without being provocative of war, the principal objectives of the United States in the Far East should be:

a. Preservation of the territorial and political integrity of the non-Communist countries in the area against further Communist expansion or subversion.

b. Progressive improvement of the relative political, economic and military position of the non-Communist countries vis-à-vis that of the Asian Communist regimes.

c. Reduction of Chinese Communist power and prestige, or securing by reorientation a Government on the mainland of China whose objectives do not conflict with the vital interests of the United States.

d. Disruption of the Sino-Soviet alliance through actions designed to intensify existing and potential areas of conflict or divergence of interest between the USSR and Communist China.

e. Creation in Asia of political and social forces which will zealously spread the greater values of the Free World and simultaneously expose the falsity of the Communist ideological offensive.

courses of action

5. In order to preserve the territorial and political integrity of the area, the United States should:

a. Maintain the security of the Pacific off-shore island chain (Japan, Ryukyus, Formosa and the Pescadores, the Philippines, Australia, and New Zealand) as an element essential to U.S. security; assisting in developing such military strength in each area as is required by U.S. security and is consistent with each area’s capability and maintenance of domestic stability.

b. In the event of unprovoked attack on the Republic of Korea, employ, in accordance with Constitutional processes, U.S. armed forces against the aggressor. While supporting the unification of Korea by all peaceful means and maintaining appropriate safeguards against ROK offensive action, continue military and economic assistance programs consistent with U.S. security interests and subject to continued ROK cooperation.

c. Ratify the Mutual Defense Treaty with the Republic of China covering Formosa and the Pescadores, and jointly agree upon appropriate safeguards against Chinese Nationalist offensive action. Pending the ratification of such a Treaty, continue the existing unilateral arrangement to defend Formosa and the Pescadores (excluding the Nationalist held off-shore islands). For the present, seek to preserve, through United Nations action, the status quo of the Nationalist-held off-shore islands; and, without committing U.S. forces except as militarily desirable in the event of Chinese Communist attack on Formosa and the Pescadores, provide to the Chinese Nationalist forces military equipment and training to assist them to defend such off-shore islands, using Formosa as a base. However, refrain from assisting or encouraging offensive actions against Communist China, and restrain the Chinese Nationalists from such actions, except in response to Chinese Communist provocation judged adequate in each case by the President.

d. In the event of Communist overt armed attack in the area covered by the Manila Pact prior to the entering into effect of the Pact, take actions necessary to meet the situation, including a request for authority from Congress to use U.S. armed forces, if appropriate and feasible. When the Pact is in effect, be prepared to oppose any Communist attack in the Treaty area with U.S. armed forces if necessary and feasible, consulting the Congress in advance if the emergency permits.

e. Employ all feasible covert means, and all feasible overt means including, in accordance with constitutional processes, the use of armed force if necessary and appropriate, to prevent Indonesia or vital parts thereof from falling under Communist control by overt armed attack, subversion, economic domination, or other means; concerting overt actions with the other ANZUS nations.

f. In the event of Communist overt armed attack or imminent threat of such attack against any other country in the area (not covered by a security treaty to which the United States is a party), this evidence of a renewal of Communist aggressive purposes would constitute such a grave menace to the United States as to justify the President in requesting authority from Congress to take necessary action to deal with the situation, including the use of U.S. armed forces, if appropriate and feasible.

g. In accordance with NSC Action No. 1292–c, paragraph 5–g awaits further consideration by the Secretary of State in consultation with the Secretary of Defense. Upon report of the Secretary of State thereon to the Council, adoption by the Council of a paragraph 5–g, and its approval by the President, the approved paragraph will be circulated for insertion herein.

h. Encourage the conditions necessary to form as soon as possible and then participate in, a Western Pacific collective defense arrangement including the Philippines, Japan, the Republic of China and the Republic of Korea, eventually linked with the Manila Pact and ANZUS.

i. If requested by a legitimate local government which requires assistance to defeat local Communist subversion or rebellion not constituting armed attack, the United States should view such a situation so gravely that, in addition to giving all possible covert and overt support within the Executive Branch authority, the President should at once consider requesting Congressional authority to take appropriate action, which might if necessary and feasible include the use of U.S. military forces either locally or against the external source of such subversion or rebellion (including Communist China if determined to be the source).

j. Assist where necessary and feasible non-Communist Government and other elements in the Far East to counter Communist subversion and economic domination.

k. Maintain sufficient U.S. forces in the Far East as clear evidence of U.S. intention to contribute its full share of effective collective aid to the nations of the area against the Communist threat, and to provide assurance to the people of the Far East of U.S. intent and determination to support them in the event of Communist aggression.

6. In order to enhance the individual and collective strength of the non-Communist countries, the United States should:

a. Increase efforts to develop the basic stability and strength of non-Communist countries, especially Japan and India, and their capacity and will to resist Communist expansion.

b. Continue (1) to recognize the Government of the Republic of China as the only government of China and its right to represent China in the United Nations, and (2) to furnish direct support to its defense establishment and its economy.

c. Encourage the prompt organization of an economic grouping by the maximum number of free Asian states, including Japan and as many of the Colombo Powers as possible based on self-help and mutual aid, and the participation and support (including substantial financial assistance) of the United States and other appropriate Western countries, through which, by united action, those free Asian states will be enabled more effectively to achieve the economic and social strength needed to maintain their independence.

d. Take all feasible measures to increase the opportunities of such countries for trade with each other and with other Free World countries.

e. Provide in South and Southeast Asia, through the economic grouping referred to in c above or otherwise, such economic and technical aid over an extended period as can be used effectively to accelerate the present slow rates of economic growth, and to give to the peoples in these areas a sense of present progress and future hope, which is currently lacking.

f. Develop and make more effective information, cultural, education and exchange programs; and expand the program for training of free Asian leaders.

g. Encourage the countries of the area to use qualified Americans as advisers and develop a program for training such persons.

h. Seek, by intensifying covert and psychological activities, and by utilizing indigenous persons to the greatest extent feasible, to (1) increase the understanding and orientation of Asian peoples toward the Free World and (2) expose the menace of Chinese imperialism and world Communism.

i. Encourage and support, more vigorously and effectively, the application of private capital to the development needs of free Asian countries under arrangements avoiding “exploitation” yet acceptable to private interests.

7. In order to weaken or retard the growth of the power and influence of the Asian Communist regimes, especially Communist China, the United States should:

a. Continue to refuse recognition of the Chinese Communist regime and other Asian Communist regimes, but deal with each on a local basis and with regard to specific subjects where the regime is a party at interest.

b. Continue to oppose seating Communist China in the Security Council, the General Assembly, and other organs of the United Nations.

c. In accordance with NSC Action No. 1292–d, paragraph 7–c awaits further consideration by the Secretary of State, in consultation with the Secretary of Commerce. Upon report of the Secretary of State thereon to the Council, adoption by the Council of a paragraph 7–c, and its approval by the President, the approved paragraph will be circulated for insertion herein.

d. Utilize all feasible overt and covert means, consistent with a policy of not being provocative of war, to create discontent and internal divisions within each of the Communist-dominated areas of the Far East, and to impair their relations with the Soviet Union and with each other, particularly by stimulating Sino-Soviet estrangement, but refrain from assisting or encouraging offensive actions against Communist China or seaborne commerce with Communist China, and restrain the Chinese Nationalists from such actions, except in response to Chinese Communist provocation judged adequate in each case by the President.³

e. Continue the policy towards Indochina and Thailand stated in Annex A.⁴

8. a. The United States should attempt to convince the other Free World countries of the soundness of U.S. policies toward Communist China and toward the Republic of China and of the advisability of their adopting similar policies, without, however, imposing such pressures as would be seriously divisive.

b. In its Pacific role, the United States should be less influenced by its European allies than in respect to Atlantic affairs.

9. The United States must keep open the possibility of negotiating with the USSR and Communist China acceptable and enforceable agreements, whether limited to individual issues now outstanding or involving a general settlement of major issues.

Annex B⁵

Matters To Be Taken Into Account in a Study of Economic Defense Policy Applicable to Trade With the Communist Bloc

This Annex states suggestions, points of view, and other matters to which attention was called during Council and Planning Board discussion of NSC 5429/3, and which, pursuant to the majority proposal for par. 7–c-(4) (p. 12) of the foregoing statement of policy, would be taken into account in a study of economic defense policy applicable to trade with the Communist bloc.

I. Draft prepared by Special Assistant to the President for National Security Affairs of certain principles which the President desired to have studied, based on his comments at the NSC Meeting on December 1, 1954 during the discussion of par. 8–c of NSC 5429/3

1. In trading with Communist China or the European Soviet bloc, the United States and its major allies should operate under the same system of controls; except that the United States may also deny or limit, as appropriate, export of:

a. Such strategic commodities as would contribute significantly to the war potential of the Communist country or Communist bloc, the U.S. unilateral control of which can reasonably be expected, because of U.S. production, supply, or technology, to be effective, in depriving such Communist country or Communist bloc of a significant contribution to the latter’s war potential.

b. Other commodities, whether strategic or not, which raise such special political problems as to warrant U.S. export control in the absence of international controls.

2. Whereas the trade controls exercised by the United States and its major allies with respect to Communist China need not at the present time be the same as the trade controls exercised by the United States and its major allies with respect to the European Soviet bloc, the United States and its major allies should move toward a common level of controls on trade with all countries of the Soviet bloc which would take into account the differing needs of the USSR and Communist China in further developing the war potential of each.

3. The United States and its major allies should continue to embargo the export to all countries of the Soviet bloc of munitions, scarce metals, heavy fabricating machinery, items representing technological advances, and other items which contribute significantly to the war potential of the country to which exported.

II. Department of Commerce draft proposal for revision of par. 8–c of NSC 5429/3

1. At a time determined by the Secretary of State, with due regard to the issues then pending between Communist China and the free world (such as the unlawful detention of American military personnel), seek agreement with other free world countries of the principle that trade controls (export, import and financial) should be generally uniform for the entire Soviet dominated bloc both in Europe and Asia.

2. In accordance with this principle develop a control program which would include:

a. A common export control list of commodities, services and technical data—less extensive and restrictive than the present ChinCom lists but more extensive than the present COCOM lists—which would be applicable to the entire Soviet dominated bloc and which would reflect consideration of factors such as:

(1) The objective of retarding the growth of war potential, including the war mobilization base, of the entire Soviet bloc including Communist China

(2) The relative ease of movement or transshipment of goods between the European and Asian Communist areas.

(3) The extent to which Communist China’s military and economic development is dependent upon supplies and technical assistance from, and markets in, the USSR.

(4) The probability that failure of the USSR or of China to meet its current and future commitments to the other for goods or services could become a significant cause of Sino-Soviet friction.

b. An agreement from our allies that in trade with the Soviet dominated bloc in non-embargoed commodities there should be no extension of long term credits by the free world to the Soviet dominated bloc.

c. An agreement that, prior to making effective any modification of free world trade controls towards China, the U.S. and other governments would explore the possibility of obtaining in return some concessions from Communist China on issues then pending between Communist China and the free world.

3. In order to achieve this program the United States should:

a. Undertake a major diplomatic effort and in that diplomatic effort use such leverage and bargaining power as is available in U.S. economic assistance programs, offshore procurement, adjustments in the Buy American Act, etc.

b. Make clear to our allies, that U.S. concurrence in an adjustment of trade controls towards Communist China is conditioned upon their acceptance of the general approach set forth in paragraphs 1 and 2 above.

4. Upon the adoption of this program, the United States embargo on imports and exports to Communist China should be lifted and controls should be adjusted in accordance with the principle that in trading with Communist China or the European Soviet bloc, the United States and its major allies should operate under the same system of controls; except that the United States may also deny or limit, as appropriate, export of:

a. Such strategic commodities as would contribute significantly to the war potential of the Communist country or Communist bloc, the U.S. unilateral control of which can reasonably be expected, because of U.S. production, supply, or technology, to be effective in depriving such Communist country or Communist bloc of a significant contribution to the latter’s war potential.

b. Other commodities, whether strategic or not, which raise such special political problems as to warrant U.S. export control in the absence of international controls.

III. Related Intelligence Estimates

A. NIE 100–5–54, “Consequences of Various Possible Courses of Action with Respect to Non-Communist Control over Trade with Communist China”, in process. This report will include the Intelligence Estimate called for by NSC Action No. 1283–b, 228th NSC Meeting, December 9, 1954:

“b. Noted the President’s desire that a Special National Intelligence Estimate be prepared, as a matter of urgency, analyzing the net effect on Japan and on North China and Manchuria of an increased flow of consumer goods from Japan to Communist China in return for products from Communist China required by the Japanese economy.”

B. SNIE 100–6–54, “World Reactions to Certain Possible U.S. Courses of Actions Against Communist China,” November 28, 1954.

C. NIE 13–54, “Communist China’s Power Potential Through 1957,” June 3, 1954

D. NIE 10–7–54, “Communist Courses of Action in Asia Through 1957,” November 23, 1954

IV. MDAC Comment on Intelligence Support

Any attempt to apply COCOM controls to additional commodities will require extensive intelligence support. This support is prepared on an ad hoc basis, and is far more detailed than the material included in the national intelligence estimates. Specifically, in each case where we try to get back on the COCOM lists a commodity which has been dropped, the intelligence community will have to take the argument used earlier this year and attempt to strengthen our basis for negotiation.

V. FOA draft proposal for revision of par. 8–c of NSC 5429/3

1. At a time determined by the Secretary of State, if feasible after a study is completed, begin consultations, particularly with the UK and France, looking toward agreement with the other cooperating industrialized countries of the free world on the extent, nature, and method of controls on trade with Communist China.

2. The United States objective in these negotiations is:

a. To establish a similar level of control vis-à-vis the entire Communist dominated bloc including Communist China, the Soviet Union, and Eastern European satellites, with only such variations as may reflect peculiar circumstances in individual countries which could not easily be met by transshipment within the Communist area.

b. To bring United States levels of controls to the same level as the controls maintained by other cooperating free world countries with only such variations of greater U.S. controls in those cases where U.S. sources alone can be effective in denying strategic matériel or technology to the Communist area.

3. In the negotiations for the adjusted level of controls on trade with Communist China, seek at the same time to obtain agreement with other free world countries to increase the control on the Soviet Union and European Communist bloc on those items for which further intelligence information or further review indicate a net advantage in free world denial, particularly where such denial might achieve a divisive effect between Communist China and the Soviet Union.

4. Place particularly high priority on the maintenance of controls on those items which affect the mass production of modern arms and weapons, such as aircraft, guided missiles, nuclear weapons and on communication and radar devices for conducting and countering atomic warfare at long range.

VI. Views of the Joint Chiefs of Staff (Memo for NSC from Executive Secretary, “Current U.S. Policy Toward the Far East”, November 29, 1954)

From a strictly military point of view, a trade control program which would impose maximum restrictions on trade with the Soviet Bloc and particularly with Communist China, would be most desirable. The Joint Chiefs of Staff recognize that the feasibility of certain courses of action designed to impose such maximum restrictions is uncertain in view of existing free world trade agreements and other economic and political considerations. However, more positive measures are necessary in the implementation of basic national security policy, because the timely achievement of the broad objective of such policy cannot be brought about if the U.S. is required to defer to the counsel of the most cautious among our Allies or if it is unwilling to undertake certain risks inherent in the adoption of dynamic and positive security measures.

1. On Dec. 23 this sentence was revised to read as follows: “The enclosed statement of policy is to guide the implementation of all other existing Far Eastern policies (reference[s] B–L) modifying them where inconsistent, pending Planning Board and Council review and revision of these more particular policies.” (Enclosure to note from Lay to all holders of NSC 5429/5, Dec. 23; JCS files, 092 Asia (6–25–48))
2. All sections of this paper except Annex B are printed in Department of Defense,United States–Vietnam Relations, 1945–1967, Book 10, pp. 835–852. Annex B is printed below. Although the text in United States–Vietnam Relations is dated Dec. 22, 1954, it includes, besides revisions to the end of 1954 which are noted here, revisions in paragraphs 5 and 7 which were approved by the National Security Council at its meetings held on Jan. 5 and 13, 1955.
3. On Dec. 29 Lay circulated to the NSC a revised page in which the words “or seaborne commerce with Communist China,” in paragraph 7–d were deleted. (JCS files, 092 Asia (6–25–48))
4. Annex A is not printed here; see footnote 2, above.
5. Annex B was transmitted to the NSC under cover of a memorandum by Lay dated Jan. 20, 1955, to be attached to NSC 5429/5. (JCS files, 092 Asia (6–25–48))