S/S–NSC files, lot 63 D
351, NSC 5429 Series
No. 436
Draft Statement of Policy, Prepared
by the NSC Planning
Board1
[Extracts]
top
secret
NSC
5429/4
[Washington,] December 10,
1954.
Current U.S. Policy in the Far
East
. . . . . . .
courses of action
5. In order to preserve the territorial and political integrity of
the area, the United States should:
. . . . . . .
**c. Ratify the Mutual Defense Treaty with the Republic of
China covering Formosa and the Pescadores, and jointly agree
upon 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 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.
. . . . . . .
*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:
. . . . . . .
[Page 1010]
| Majority Proposal |
State Proposal |
| *c. (1) For the immediate future and pending completion of
and U.S. action on the study referred to in (2) below,
maintain the current U.S. export, import and financial
controls on trade with Communist China, and strongly urge
other free world countries to maintain their current
controls on trade with Communist China and to refrain from
such actions as sending trade missions to Communist
China. |
**c. (1) Maintain the current level of United States
export, import, and financial controls on trade with
Communist China and administer these controls in such manner
as to minimize friction with other Free World countries
which might tend to lessen their active cooperation in the
multilateral control program. |
| (2) An appropriate agency or agencies should study on an
urgent basis, all aspects of U.S. economic defense policy
applicable to trade with the Communist bloc (including
Communist China), taking into account in such study, among
other things, the matters set forth in Annex B, and should
submit to the National Security Council at the earliest
practicable date comprehensive and detailed recommendations
for such revisions in such policy as may be required by
national security interests, both long and short range. [Any
future change in U.S. over-all economic defense policy
should be premised on the concept that it is part of an over
all negotiating position which seeks to obtain an
appropriate quid pro quo from any
friendly, neutral, or communist country profiting from any
such change.]† |
(2) Urge other Free World countries to maintain the
current level of export controls on trade with Communist
China. In aid of this effort, the U.S. should be prepared to
exercise a greater degree of flexibility in handling
problems of minor exceptions to the multilateral
embargo. |
[Page 1011]
| (3) At a time determined by the Secretary of State, if
feasible after the study referred to in (2) above is
completed, begin consultations, particularly with the U.K. 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. |
(3) Whenever it may be determined by the Secretary of
State that further effort to maintain the current
multilaterally agreed level of export controls would be
seriously divisive among our allies or lead nations needing
trade with Communist China toward an accommodation with the
Soviet bloc, the Secretary should report this determination
to the Council together with his recommendations, including
guiding principles for any negotiation relating to revision
of the multilaterally agreed controls. |
*/**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.
. . . . . . .
Annex B
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 (p. 11) 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.
[Page 1012]
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 to 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:
[Page 1013]
- 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 nonembargoed
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 Controls over Trade with Communist
China”, in process.2
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,
1954.3
- C.
- NIE 13–54, “Communist
China’s Power Potential Through 1957,” June 3, 1954.4
- D.
- NIE 10–7–54, “Communist
Courses of Action in Asia Through 1957,” November 23,
1954.5
IV. MDAC [EDAC?]
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:
[Page 1015]
- a.
- To establish a similar level of controls 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).6
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.
