Office of the Historian

S/S–NSC files, lot 63 D 351, NSC 5429 Series

No. 413
Memorandum by the Deputy Assistant Secretary of State for Economic Affairs (Kalijarvi) to the Secretary of State

top secret
[Washington,] November 29, 1954.

Subject:

  • Current U.S. Policy in the Far East (NSC 5429/3)1

Background:

The subject paper has been overtaken by recent events which raise major international political problems and make it clear that [Page 958] no revision in or review of controls applicable to trade with Communist China can be undertaken at present. The problem raised by the higher level of controls applicable to Communist China as compared with the European Soviet bloc remains a troublesome one which should, however, be dealt with as soon as the general political situation permits. In this connection, you will wish to know that at the recent Economic Defense Officers’ conference held in Paris the week of November 15, the missions represented unanimously reported that our insistence on holding to a multilateral level of control for Communist China which is higher than that for Eastern Europe is driving us into a negotiating position of increasing isolation and undermining our ability to exert leadership in other matters. The mission representatives particularly urged that the United States be careful to avoid a procedure, whenever the China policy has been reviewed and a course set, of negotiating solely with the British and French and coming then to the other participating countries with a predetermined tripartite position.

The following general conclusions of the Economic Defense Officers’ conference on the subject of China trade controls may be of interest:

  • “1. A review of the US policy regarding trade with China should be undertaken urgently, but it is desirable that this be undertaken in the light of a reappraisal of our overall China policy.
  • “2. The higher level and broader scope of the China trade controls in the past have not been shown to have been of more than marginal utility in impeding the industrial and military build up of China.
  • “3. The pressure from our allies for the adjustment of the level of trade controls with China stems more from political than economic reasons, except in the case of Japan where acute economic problems are involved.
  • “4. A completely isolated position from its allies by the United States on the question of China trade controls will detract from the effectiveness of its leadership in other matters.
  • “5. A dual level of trade controls for China and for the European Soviet bloc countries can be simplified for smoother operation, but practical measures for preventing frustration of the tighter China controls have not yet been devised.”

Recommendations:

It is recommended that there be no relaxation in trade controls applicable to Communist China at this time in the light of recent events and in the interest of maintaining maximum pressures on that area, and therefore that the National Security Council should not consider the revision of trade controls toward Communist China until the current situation becomes clarified.

  1. Document 397.↩