No. 743
Editorial Note

In a memorandum to the National Security Council dated March 3, Lay submitted to the Council a report by the Planning Board recommending amendments in NSC 152/3 (“Economic Defense”, dated November 6, 1953) in regard to controls over trade with the People’s Republic of China. An excerpt from the Planning Board’s report follows:

“7. The ‘Courses of Action’ set forth in 152/3 should be amended by adding, at page 7, a new paragraph as follows:

Toward Communist China and North Korea

“39. In the absence of further Chinese Communist aggression and during the period prior to achieving settlements satisfactory to the United States in the areas around Communist China, the United States should: [Page 1615]

Proposed by State, Defense and FOA Proposed by Commerce
“a. Continue to embargo exports and imports and maintain present financial controls. Exceptional treatment may be accorded certain exports (e.g., propaganda, humanitarian, diplomatic) or imports (e.g., strategic materials) on a case-by-case basis after necessary interagency coordination. “a. Reduce U.S. export controls to the CHINCOM levels (International List I, II, and III, plus the China Special List covering additional machine tools, iron and steel products and power equipment.)
“b. With respect to the controls of other free world countries over trade with Communist China: “b. With respect to the controls of other free world countries over trade with Communist China:
“(1) Release Japan gradually, as appropriate, from its obligations under the U.S.-Japanese bilateral agreement … to maintain export controls higher than the CHINCOM levels. “(1) Permit Japan forthwith to relax its export controls from the levels of the U.S.-Japanese bilateral agreement to the CHINCOM levels.
“(2) Seek to have other nations continue existing export controls at the CHINCOM levels. “(2) Resist any reduction in export controls below the CHINCOM levels, except for minor changes which are specifically justified.
“(3) Employ all feasible means to maintain the UN General Assembly Resolution … of May 18, 1951.”
“c. Modify foreign assets controls to permit imports into the U.S. of Chinese-origin goods.
“d. Determine what other changes are desirable in foreign assets controls which now block Chinese Communist assets in the U.S.
“e. Modify shipping-bunkering and transaction controls in accordance with the foregoing courses of action.”

(Ellipses represent footnote citations. For the Planning Board report, dated March 3, see Document 175. For text of NSC 152/3, see volume I, Part 2, page 1207.)

In NSC Action No. 1064–b, the NSC at its meeting held on March 11: “Adopted the proposal by State, Defense and FOA, regarding Japan, contained in the proposed paragraph 39–b–(1) as set forth in paragraph 7 of the enclosure to the reference memorandum.” (S/SNSC (Miscellaneous) files, lot 66 D 95) For an extract from the memorandum of discussion at the meeting held March 11, [Page 1616] together with the remainder of NSC Action No. 1064, see Document 178.