S/S–NSC files, lot 63 D 351, NSC 5429 Series
No. 461
Memorandum by the Deputy Assistant
Secretary of State for Economic Affairs (Kalijarvi) to the Under Secretary of State
(Hoover)
Subject:
- NSC Policy on Controls over Trade with Communist China (NSC 5429/5).
On December 21 the NSC decided to ask the new Council on Foreign Economic Policy to make an urgent study of United States policy regarding trade with the entire Soviet Bloc, but deferred action on the text of Paragraph 7(c) of NSC 5429/5 setting out interim policy respecting controls over trade with Communist China. The Secretary of State was asked to provide the text for this revised Paragraph (except, presumably, the sub-paragraph already acted upon, relating to the future study) at the meeting scheduled for January 5. The Secretary was asked to consult with the Secretary of Commerce, but it seems to be understood that the President is prepared to accept whatever text the Secretary of State may decide to propose.
Discussion:
Prior to the publicizing of the imprisonment of the captured United States airmen, the United States was beginning to feel considerable [Page 1060] pressure from other governments for revision in the multilateral level of export controls over trade with Communist China—a level currently considerably higher than the level for the European Soviet Bloc, but open to substantial frustration through transshipment from Eastern Europe. It seems reasonable to assume that, because of the airmen incident, other governments may be willing at the moment to forebear somewhat in their pressures for adjustment in the multilateral controls, but the situation is not a stable one and could change suddenly. The Secretary of State, therefore, should be in a position to call the Council’s attention at any moment to the development of a serious division with our allies over the retention of the present control level.
We might help ourselves to hold the current multilateral level for a while longer if we can smooth out certain irritations in the Paris strategic trade control committees over procedural technicalities and matters of minor substance in the operation of current controls. A rule of reason under present NSC policy ought in theory to provide us with this necessary flexibility which would remove, without really affecting the impact of the embargo or our general approach in principle, some of the immediate provocation which other participating countries have for forcing a re-examination of the entire question of China trade controls. However, without some language in the NSC policy directive explicitly recognizing the need for this flexibility, other agencies seem unable or unwilling, at the working level, to concur in the appropriate actions.
Attachment A1 hereto presents proposed language for inclusion in NSC 5429/5 in accordance with the thoughts outlined above. It [Page 1061] also makes it clear that retention of United States unilateral controls and retention of the current level of multilateral controls are separate questions, posing separate problems.
Attachment A has the concurrence of FE/CA. Time, however, has not permitted coordination of this covering memorandum.
Recommendation:
That the Department of Commerce, and subsequently the National Security Council, be urged to accept the language proposed in Attachment A hereto as the agreed text of those portions of Paragraph 7 (c) of NSC 5429/5 not hitherto adopted by the Council.
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Not attached to the source text. It was presumably identical to the “Revised State proposal for the text of Paragraph 7(c),” attached to a memorandum of Dec. 29 from McConaughy to Robertson. The memorandum stated that the Bureaus of Far Eastern Affairs and Economic Affairs had agreed on the proposal, that Kalijarvi was to present it to Hoover at a briefing that afternoon, and that Hoover was to discuss the subject with the Under Secretary of Commerce the next day. The draft proposal reads (handwritten revisions, apparently by Robertson, here omitted):
↩“c. (1) Maintain the current level of United States export, import and financial controls on trade with Communist China, and without derogating from the basic principles of these controls, administer them 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) 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, without frustrating the multilateral embargo program, handle questions of routine exceptions in such manner as to preserve and foster the willingness of other countries to retain the present level of controls.
“(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 such determination promptly to the Council.” (611.93/12–2954)