124. Memorandum of Discussion at the 271st Meeting of the National Security Council, Washington, December 22, 19551

Present at the 271st Council meeting were the President of the United States, presiding; the Vice President of the United States; the Secretary of State; the Acting Secretary of Defense; the Director, Office of Defense Mobilization. Also present were the Secretary of the Treasury; the Attorney General; the Secretary of Commerce (for Items 3 and 4); the Special Assistant to the President on Disarmament; the Director, Bureau of the Budget; the Chairman, Atomic Energy Commission (for Items 4 and 5); the Acting Director, U.S. Information Agency; the Acting Chairman, Joint Chiefs of Staff; the Director of Central Intelligence; the Deputy Assistant to the President; Special Assistants to the President Anderson and Rockefeller; the White House Staff Secretary; the Director, International Cooperation Administration; Assistant Secretary of State Bowie; Assistant Secretary of Defense Gray; the Executive Secretary, NSC; and the Deputy Executive Secretary, NSC.

There follows a summary of the discussion at the meeting and the main points taken.

[Here follows discussion of agenda items 1 and 2: “Significant World Developments Affecting U.S. Security” and “Recent NATO Council Meeting”.]

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3. Multilateral Export Controls on Trade With Communist China (NSC 5429/5; NSC Action No. 14872)

Secretary Dulles briefly summarized the last Council discussion on this subject. In accordance with the consensus at that meeting he had promptly sent a message to Foreign Secretary Macmillan.3 This message, which had personally been approved by the President, requested a delay in any unilateral British action to reduce the controls on trade with Communist China until the forthcoming visit of the British Prime Minister to Washington. Secretary Dulles had added in his message that he could see very little point in any meeting with the British if they took actions of this sort prior to the meeting. Secretary Dulles added that he had not been quite as blunt in his language as he now sounded, but very nearly so. Macmillan had replied that he would suspend any “effective action” by the British until after the Washington meeting.

Secretary Dulles said that, pending the arrival of Eden and Macmillan, it was highly desirable that a careful study of the U.S. position in response to British pressure should be prepared. Accordingly, an interdepartmental group within the Council on Foreign Economic Policy had been set up to undertake the preparation of this study. Secretary Dulles then read language which he suggested should be adopted as the “mandate” for the interdepartmental group’s study.

Secretary Dulles predicted that we would be obliged to give way somewhat to British demands if the problem were to be solved. Accordingly, we must determine what minimum concessions to the British point of view would be acceptable to us. By this course of action we may be able to hold the COCOM system together.

The President said that as he remembered it, the Council had agreed at its last discussion of this subject that it wasn’t eminently sensible to hold completely to our prior rigid position in view of the obvious ability of the Soviet Union to supply to Communist China items which were subject to Western embargo or controls. Secretary Dulles replied that that was indeed his understanding of the prior meeting, and he went on to indicate briefly the rapidly developing communications between the Soviet Union and Communist China.

Mr. Allen Dulles pointed out that there was in existence an agreed National Intelligence Estimate on the general subject of controls on trade with Communist China.4 Accordingly, he believed [Page 227] that the Central Intelligence Agency should be invited to take part in the discussions of the interdepartmental group which was preparing a study of the U.S. position. The President, turning to the Secretary of State, told him to tell Mr. Dodge that at the direction of the President he was to consult with the Central Intelligence Agency on intelligence matters which might arise in the course of this study.

Mr. Dillon Anderson then pointed out that Secretary Weeks had been invited to participate with the Council in the discussion of this matter, and might wish to express his views.

Secretary Weeks said that, like everybody else, he had been completely surprised when the British had served notice on us of their intention to lower the controls on their trade with Communist China. Secretary Dulles broke in to say that he, for one, had not been surprised by the British notice, Secretary Weeks went on to say that he could not understand why the British had made this move, in view of the high level of British prosperity at the present time. What worried him in particular was the danger to the entire COCOM and CHINCOM structures posed by the British move. Secretary Weeks doubted whether the whole system of multilateral controls could survive many more such unilateral blows. Secretary Dulles pointed out that as yet, at least, the British had taken no unilateral action.

Secretary Weeks went on to state that he assumed that whatever the British did the United States had no intention of changing its own policy of embargoing trade with Communist China. This assumption was supported, and Secretary Weeks added that, this being the case, an opportunity would be provided for Japan to get an edge on trade with Communist China—if the British would cooperate. Expressing agreement with Secretary Weeks, Secretary Dulles advised that we should look at this problem with our eyes primarily on Japan rather than on the British. Secretary Weeks said that if the British could be induced to give a break to the Japanese in terms of trade with Communist China, they could do so without hurting themselves very much. The President expressed the opinion that if, in the circumstances, the United States retained its embargo on trade with Communist China, the Japanese could be expected to drive the British out of all competition for trade with Communist China.

Secretary Robertson said that he felt obliged to express once again the very deep feelings of the Joint Chiefs of Staff with respect to the British proposal. In the Defense Department, continued Secretary Robertson, it was sensed that the British Board of Trade was pushing this proposal for decontrol down the throat of the British Ministry of Defense. If this was indeed the case, an opportunity was presented to exert influence on British policy. In recent days the British military people had presented the U.S. Defense Department with such a long list of defense matériel which they desired, that the [Page 228] list amounted to a book. It might be possible to use their desire for this matériel to induce the British to take a more realistic view of the dangers of decontrolling British trade with Communist China. At least the British military people might be in a position to exert some pressure on the civilians who favored this policy.

The President said that he had one comment to make on this subject. Hadn’t the history of the world down to this time proved that if you try to dam up international trade, the dam ultimately bursts and the flood overwhelms you? Our trouble was that our domestic political situation compelled us to adopt an absolutely rigid policy respecting our trade with Communist China and the Soviet Union.

Secretary Robertson pointed out the view of the Joint Chiefs of Staff that there should be no relaxation of the multilateral level of controls on trade with Communist China unless and until we could get some kind of settlement of outstanding issues in return for this relaxation.

The President commented that he supposed we should be as tough as we can with the British in the forthcoming negotiations on trade with China. Nevertheless, he could not forbear to point out that our own policy on trade with the Communist bloc was a patchwork puzzle. The President said that he could still not understand why we proceed to trade in items with the Soviet Union which we will not trade with Communist China. The President added that he was not afraid of Communist China—not in this decade, at least.

The National Security Council:

Noted and discussed an oral report by the Secretary of State, pursuant to NSC Action No. 1487–b, that the British Government had agreed not to take effective action on the reduction of export controls on trade with Communist China, until this subject could be discussed at the forthcoming meeting of the President with the British Prime Minister.
Agreed that the United States should be prepared through negotiation to acquiesce in an absolute minimum of liberalization of the current level of multilateral China trade controls on the assumption that some reduction will be necessary to retain mutual agreement among countries participating in the Consultative Group.
Noted the President’s directive that the Council on Foreign Economic Policy, through an interdepartmental group and with intelligence advice from the Central Intelligence Agency, should prepare a study of the U.S. position on this subject, in accordance with b above, for use at the forthcoming meeting of the President with the British Prime Minister.5

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Note: The above actions, as approved by the President, subsequently circulated for information and guidance, and referred to the Chairman, CFEP, for implementation of paragraph c thereof.

[Here follows discussion of agenda items 4 and 5: “United States Policy Toward Yugoslavia” and “U.S. Policy on Control of Armaments”.]

S. Everett Gleason
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared by Gleason on December 23.
  2. See footnote 5, Document 116.
  3. The message, dated December 10, is scheduled for inclusion in the economic defense compilation in a forthcoming volume.
  4. NIE 100–55, “Controls on Trade With Communist China”, January 11, 1955, is scheduled for inclusion in the economic defense compilation in a forthcoming volume.
  5. The lettered subparagraphs constitute NSC Action No. 1494. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95)