338. Telegram From the Delegation at the Foreign Ministers Meetings to the Department of State 1

Secto 222. East-West trade.

1. East-West Trade Working Group held its fifth meeting Tuesday morning at 10:30 a.m. D’Harcourt in chair. Tippetts, UK, reviewed discussions to date. Said had hoped could avoid recriminations about strategic controls as outside terms of reference and that Soviet Representative, mindful of recent upward movement East-West trade would give Western powers some reason for hoping Soviet had abandoned old policies self-sufficiency in favor larger reliance on trade. Also had expected reasonable discussion concrete proposals put forward Western side as constructive measures. Instead, UK Rep went on, we have heard about nothing from the Soviet Rep but strategic controls. The issue of Soviet trade policy, moreover, had been confused by the Soviet Rep telling us USSR has never followed policy of self-sufficiency. The Soviet Rep has suggested no measures other than the abolition of Western strategic controls and has not replied meaningfully to proposals put forward on [Page 712] Saturday by Western reps. Thus the Soviet posture in the Working Group essentially a negative one, the Western position much more positive. Once more he (the UK Rep) would ask his Soviet colleague: Does he have no other positive measures to suggest? Does he have no response to make to the specific proposal made by Western reps?

2. After US Rep associated himself with preceding statement, Cheklin made long statement largely repeating points made earlier statements to which, he observed, his colleagues were apparently not attentive. Gist of Western position is that wide opportunities for East-West trade exist despite strategic controls but level of trade is low because of Soviet policy. USSR cannot accept such statements. Impossible speak of free access to trade when there are so many discriminatory restrictions placed on trade with the USSR and the Peoples Republics. Of this he had already given abundant documentation and could give more if needed. As to the trade policy of the USSR, it consists, as Bulganin has said, of seeking trade with all countries on an equal basis regardless of political or social structures. So far from being an obstacle to trade Soviet policy was devoted to the expansion of trade as a means of developing confidence and therefore promoting peace. Mention had been made of autarky. The USSR had pursued a policy of industrialization; was this autarky? Have not all Western countries sought to industrialize? Does industrial development destroy the basis for trade? Obviously not; trade is highest between developed countries. Considering the blockades and restrictions directed against the USSR at various times is it any wonder that the USSR has striven to develop its industry? We are not for autarky but for a balanced trade, but we must be free to develop our own industry. What would happen to the USSR if it did not produce ships, machinery, oilwell drilling equipment, etc? Nevertheless this does not undermine the foundations of trade with the West. In fact we are now exporting machinery and equipment and Western businessmen should be quite interested in seeing some of the new products we have to offer.

Continuing, Cheklin referred to assertions Trade Working Group could not discuss strategic controls but should discuss removal other obstacles to trade. What are these obstacles? French Rep had cited list of things French could sell; also commodities France interested in obtaining. Trade in these commodities goes on. The USSR is not aware of any restrictions. If there are difficulties, such as the matters mentioned in connection with transportation, terms of delivery, insurance, price, quality, etc., these technical matters are not for the Foreign Ministers to discuss. The ECE has a number of technical committees to deal with such problems or they can be left to the buyer and seller to settle.

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It is true, the Soviet Rep went on, certain obstacles existed also in respect of commodities not on the prohibited lists such as import restrictions, lack of MFN treatment and complex licensing procedures, but these obstacles were also the result of the political attitudes existing in the West toward all East-West trade. Thus these obstacles were clearly covered by the USSR draft. As far as the problem of patents and copyrights mentioned by the UK Rep, the Soviet Rep felt we do not have to deal with this here. No one argued that any particular transaction fell through on account of such matters. If there were any real problems here he would refer them to appropriate agencies in Moscow. One cannot seriously maintain such obstacles are crucial.

Concluding Soviet Rep would reply to the questions put so dramatically by his British colleague as to concrete proposals. The Rep of the USSR is amazed that the USSR is accused of lack of initiative. It is not for the USSR to show initiative but for the Western powers who are responsible for the restrictions and prohibitions on trade. The USSR has often showed its initiative in the past; now let other countries show some by dealing with the prohibited lists in accordance with the Soviet draft resolution which presents a real basis for agreement.2

The above is reported rather fully to give the full flavor of Soviet intransigeance on the question of strategic controls and also because no verbatim record of the Trade Working Group discussions is being kept.

There being no further discussion of the two trade paragraphs of the tripartite Western memorandum,3 it was then agreed to discuss paragraph 2 of the Soviet memorandum4 (freedom of navigation) and paragraph 17 of the French memorandum5 (civil aviation).

Principal adviser Soviet Ministry Foreign Affairs, concerning history of adherence three Western nations to concept of freedom of the high seas, then spoke generally of recent instances of interference, detention and some of these were Soviet, Polish and UK ships, concerning which respective governments have protested and even US had indicated action was not legal. Other cases of discrimination involved annulments of charters and refusals to bunker. He then referred to the wording of paragraph two of the Soviet memorandum and described it as a general formula to which all delegations should have no difficulty agreeing. He did not propose immediate removal [Page 714] of restrictions but a gradual lifting. Avoided specifics to avoid embarrassment.

US took position Soviet paragraph 2 irrelevant to studies of experts. Referred briefly to the directive requesting this conference study obstacles freer contacts and assumed reference could only be to those obstacles over which nations represented had control. Pointed out Soviet Rep had not alleged any hindrance for which US or any of three Western powers were responsible. US ports and international waterways under US jurisdiction are open to Soviet vessels provided they observe due and nondiscriminatory procedures. US has not deviated from principle freedom of seas. Not task of Experts Committee to discuss broad principles having no application in present conference.

US Reps then introduced proposed memorandum of understanding on civil aviation6 in behalf three Western Dels indicating that while all other forms of transportation between Soviet and Western countries were free of artificial barriers, direct air navigation still not possible. An understanding at this conference in principle for the establishment of direct air transportation services between the Soviet and Western nations to be initiated by the conclusion of bilateral agreements would be one concrete response to the summit directive. Explained that prerequisite commercial rights almost invariably exchanged on reciprocal basis. However, on many occasions nations have not desired immediate exercise such rights but in all cases welcomed early inauguration of services by airlines of other nations in order to meet legitimate demand for transport without delay. Recited briefly many mutual benefits through air services in relation freer contacts, exchanges, tourism, mail and cargo. Tabled proposed memorandum of understanding. While closely following previous agreed tripartite position, memorandum was couched in non-controversial terms designed to facilitate possible Soviet acceptance as quadripartite recommendation.

No time available after introduction aviation paper so discussion postponed until Wednesday.7 Attitude Soviet Del and Soviet expert Vinogradov’s statement, see Secto 195,8 today appear to indicate that planned Soviet tactic this item had been to defer as long as possible [Page 715] and avoid direct reply. Tabling of conference document should have effect of obtaining maximum Soviet concession.9

  1. Source: Department of State, Central Files, 396.1–GE/11–855. Confidential. Repeated to London, Paris, Bonn, Moscow, and the Mission at the United Nations. Passed to Defense.
  2. For text of the Soviet proposal on contacts between East and West, see Foreign Ministers Meeting, pp. 239–240, or Cmd. 9633, p. 163.
  3. For text of the Western proposal of contacts between East and West, see Foreign Ministers Meeting, pp. 245–248, or Cmd. 9633, pp. 164–166.
  4. The proposal in footnote 2 above.
  5. The proposal in footnote 3 above.
  6. See Tab C to Document 362.
  7. In the discussion on Wednesday, November 9, Cheklin stated that air agreements were a matter for bilateral negotiations and should not be considered at the Foreign Ministers meeting. He reiterated this opinion when pressed by the three Western representatives. The U.S. Delegation speculated that this indicated the Soviet Union would attempt to play the Western states and their airlines against one another to meet their own ends. (Secto 229 from Geneva, November 9; Department of State, Central Files, 396.1–GE/11–955)
  8. Document 331.
  9. On November 7, Jackson and Goodkind had lunch with Cheklin in an effort “to smoke out” the Soviet position on trade. The U.S. Delegation reported that the meeting was friendly but without any positive indications. When the U.S. Representatives brought up the question of trade in agricultural products, the Soviets indicated no interest. (Secto 213 from Geneva, November 8; Department of State, Central Files, 396.1–GE/11–855)