396.1 GE/7–1454: Telegram

The Secretary of State to the United States Delegation1

secret

Tosec 550. Secto 601.2 Vietminh proposal touches on only one phase of possible economic relations between Communist and non-Communist zones Vietnam. As this suggestion raises problem East-West trade, USDel should attempt discover contemplated duration such arrangement if made; nature goods to be exchanged; currency or currencies to be used; control mechanisms to be set up. These problems will necessarily assume importance and affect our attitude toward Geneva agreement if inter-zone trade provision written into it.

Since as Saigon 1943 states means will be found carry on trade between zones in any case Department interested know why Vietminh may be concerned to regularize it.

While there is reason to fear that formal economic exchange between two zones would work to political advantage Vietminh, some concession this character may be necessary to gain Vietminh acceptance of principle of exchange of populations. It seems likely also such exchanges goods would work to economic advantage Vietminh. However developments past few months in Indochina may have altered circumstances on which this judgment is based. Embassy Saigon should be able furnish timely comment this respect.

Department’s initial judgment of French draft submitted Secto 5994 is it does not adequately cover point six of US-UK reply to French aide-mémoire of June 26. That item specifies that provision [Page 1394]shall be made for the “peaceful humane transfer, under international supervision, of those people desiring to be moved from one zone to another of Vietnam.” Numbered paragraph (b)does not in our view adequately spell out this provision, and paragraphs (a)and (c)lay too much stress on rights of French and foreign nationals.

Dulles
  1. Drafted by Sturm of FE/PSA. Repeated to Paris as telegram 204 and to Saigon as telegram 204.
  2. Dated July 14, p. 1358.
  3. Not printed, but see footnote 2, p. 1359.
  4. Dated July 13, p. 1356.