FE files, lot 55 D 480

No. 756
Memorandum by the Acting Director of the Office of Northeast Asian Affairs (McClurkin) to the Deputy Assistant Secretary of State for Far Eastern Affairs (Drumright) 1

secret

Subject:

  • Implementation of NSC decision approving the gradual reduction to the multilateral level of Japanese controls on trade with Communist China.

On March 19, 1954, the NSC, while making no change in general US policy regarding controls on trade with Communist China, decided that the US should release Japan “gradually, as appropriate” from its obligation under the US-Japanese bilateral agreement to maintain controls on exports to Communist China higher than the CHINCOM level. The difference between the multilateral level of controls on trade with Communist China and the level maintained by Japan under the bilateral is composed of two categories of items. The first category consists of items which the Japanese agreed to embargo to Communist China because the United States prohibits or controls quantitatively their export to Eastern Europe, although they are not controlled by our Allies under multilateral agreement. The second category is the special list of “400” items which the Japanese agreed to embargo pending mutual determination on whether the items should be considered strategic.

The two categories of items covered under the bilateral are much less significant than they once were. Some of the items have in the past two years been adopted by CHINCOM for multilateral control. Over 100 of the items on the “400” list have, in the past seven months, been determined by the United States to be non-strategic, and have been removed from embargo by the Japanese. But the most important development has been the decision of the United States, as a result of a review of its security lists, to permit shipment of a large number of items to Eastern Europe. The deletion of these items from US security lists not only sharply reduces the number of items covered under the first category of the bilateral but also undermines the justification for the retention of the less important items covered under the second category of the bilateral. Although the United States is obligated to notify the Japanese promptly of items removed from the first category of the bilateral, there are 183 such items on which no notification has yet been [Page 1635] given to the Japanese. Since the Japanese Government is pressing the United States for agreement to drop 127 items there can be little doubt that it would use its legal right to remove all of these 183 items from the embargo list immediately upon such notification.

In implementing the NSC decision we have kept the following objectives in mind: (1) the need for easing political pressures in Japan; (2) the desirability of securing Japanese cooperation in maintaining multilateral controls; and (3) the avoidance of any adverse effects on the Geneva conference. In telegram 2229 to the Embassy of April 8, the Embassy was authorized to inform the Japanese that the United States was prepared to cancel the bilateral subject to assurances that the Japanese would spread the removal of items from embargo over a period of at least three months and that the Japanese would minimize publicity concerning their reduction of controls. We asked the Embassy at the time it presented our proposal to the Japanese to seek their cooperation in maintaining a high level of multilateral controls. We also cautioned that if there were any deterioration in the Far East situation we would depend upon Japan and our other Allies to tighten their controls.

The gradual reduction of Japanese controls to the multilateral level over the next three months will help us to secure wider support from Japan for the maintenance of a high level of multilateral controls against Communist China. The Embassy has estimated that the increase in Japanese exports to Communist China as a result of reduction of Japanese controls to the multilateral level will not be greater than $25 million a year. A reduction in Japanese controls has been going on for seven months. While this reduction will now proceed at an accelerated rate it can be explained as a continuation of the Japanese policy of re-examining items which Japan embargoes above the multilateral level for the purpose of removing them if they are considered not to be of strategic importance.

  1. Routed through Charles F. Baldwin, Economic Coordinator in the Bureau of Far Eastern Affairs.