326. Telegram From the Delegation at the Foreign Ministers Meetings to the Department of State1

Secto 175. Second and third meetings Trade Working Group. Follows summary report second and third meetings Trade Working Group of the Committee of Experts November 4.

Soviet Rep Cheklin, chairman for day, attempted to show that US regulations and prohibitions were discriminations directed against USSR, citing renunciation trade agreements Soviet bloc countries as proof MFN principle abandoned. Quoted US-Soviet import-export figures as indication of “miserably” low level of trade. Discriminations not confined to US in 1954. Soviet attempt to place orders totalling 400 million pounds with UK was frustrated by strategic restrictions. Very existence such restrictions a negative influence on all trade. USSR sells all goods listed its export nomenclature. Has no strategic lists. Western Powers have even created organization to restrict trade instead of promoting it. With détente now on horizon trade discrimination must cease. Trade is basic pre-requisite for all other contacts which cannot develop until trade completely free. US Rep agreed low level US versus bloc and West versus bloc trade levels but disagreed as to cause. Quoted statistics showing strategic controls effected very small portion potential trade and cited extensive list of items not subject control. Reasons for low level East-West trade must be looked for in policies Soviet trade authorities. While US did not deny right Soviet Government determine level trade by Governmental decision not to import or export this was in fact basic cause current low levels and should be acknowledged. Cited Soviet trade data and statements foreign trade policy and asked if there is now basic change in policy, if so, great progress could be made in moving from general answer to discussion of specific detail.

French Rep reminded chairman that question of strategic controls was discussed at length previous meeting. Assignment of group was to study concrete measures. Such measures proposed in first trade paragraph tripartite memorandum submitted by Pinay.2 Quoted French-USSR trade statistics to show steady increase trade since 1948.

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UK Rep asked why in paragraph 1 Soviet proposal3 the word “peaceful” had been replaced by “international” in qualifying trade. Quoted Secretary Dulles’ remarks on non-strategic trade and called for adherence to summit directive.4 Pointed out only small portion of much advertised 400 million pound shopping list covered by controls. Cited figures showing apparent Soviet lack of interest UK trade and emphasis Soviet build-up intra-bloc trade. However noticed encouraging up-swing East-West trade last few months and echoed US question whether this might suggest new Soviet policy.

Chairman Cheklin opened afternoon session with another speech designed to show current low trade levels result primarily from strategic controls. These controls were facts which were not denied and had no connection with certain alleged but non-existent trends in the USSR. Did Western Powers introduce controls to prove existence of autarky in USSR? Was surprised lack of comprehension Soviet policies which as announced by Bulganin favored greater development foreign trade based on sound commercial practices and mutual trust. Recalled UK and French Reps had indicated improvement of level of trade whereas US had argued trade declined because of Soviet policy. Called for the liquidation of strategic lists. Concluded by saying that West had not commented on substance of Soviet proposals especially the MFN principle.

US Rep repeated that Soviet had taken little advantage of wide opportunities available in peaceful trade. Unless Soviet had a real interest in developing trade West could do nothing. Feels that Soviet foreign trade policy still not clear, particularly in light of Molotov’s two-world market statement before the Supreme Council of Soviets February 1955.5 Who was the West to believe—Bulganin or Molotov? Must conclude in light actual trade experience that such statements for internal consumption as that of Molotov reflect true picture Soviet policy which therefore inconsistent appropriate development peaceful East-West trade.

French and UK Reps proposed moving next agenda item but USSR did not wish to conclude discussion his paragraph one until clear answer to Soviet proposal given.

US Rep found Soviet proposal too generalized, mere parroting of directive except unwarranted substitution international for peaceful trade. Committee of Experts was instructed to study measures. No purpose in agreeing on generalities. First trade paragraph in the tripartite [Page 686] memorandum stated Western thesis trade initiative up to Soviet Bloc so discussions should now progress by having Soviet suggest specific measures.

French Rep stated France did not control decision businessmen and traders and can only encourage foreign trade which already does. By contrast Soviet controls all commerce and can do much more to open markets. Asked directly if Soviets intend propose any measures other than abolition strategic controls which outside scope of directive and competence experts. UK Rep pointed out Soviet Rep has done nothing except call repeatedly for removal strategic controls. These not in competence this group, therefore we must deal with other specific measures.

Cheklin again defended Soviet proposal at length repeating arguments ending with request for elimination of strategic lists. French Rep asked if this was the only measure advanced by Soviets, Cheklin answered this is the primary obstacle but there are many other discriminatory policies previously described and not useful repeat.

Next meeting will be 1100 November 5 recessing thereafter until November 8.

  1. Source: Department of State, Central Files, 396.1–GE/11–555. Secret. Repeated to Paris, London, Moscow, Bonn, and the Mission at the United Nations. Passed to OSD. Regarding the first meeting, see footnote 4, Document 317.
  2. For text of this proposal, dated October 31, see Foreign Ministers Meeting, pp. 245–248, or Cmd. 9633, pp. 164–166.
  3. For text of the Soviet proposal, dated October 31, see Foreign Ministers Meeting, pp. 239–240, or Cmd. 9633, p. 163.
  4. Document 257.
  5. For text of Molotov’s report on the international situation and Soviet foreign policy, February 8, see New Times, No. 7, February 12, 1955, pp. 11–29. The text is also printed in Pravda, February 8, 1955.