104. Memorandum From the Under Secretary of State (Hoover) to the Secretary of State1
Washington, April 2,
1956.
SUBJECT
- East-West Trade Controversy
The hearings of the McClellan Permanent Subcommittee on Investigation into East-West trade in strategic materials have brought out the following basic attitudes:
- 1.
- The majority attitude of the Committee (McClellan, McCarthy, Jackson (Washington) and Symington)
has been expressed by them as follows:
- (a)
- The US public should know that our allies are shipping strategic war materials to the Soviet bloc.
- (b)
- In the 1954 negotiations the administration allowed our allies to remove many strategic items from the control lists because the US did not apply enough pressure and bargain hard enough.
- (c)
- The administration is trying to cover these facts in a shroud of secrecy and is refusing to make public classified information, documents and testimony.
- (d)
- Unless secrecy is abandoned, and all the facts are made public, the members will actively oppose foreign aid on the grounds that it is being used to build up our allies who, in turn, are building up the Russian war potential.
- (e)
- The Committee majority is actuated, in individual degrees, by reasons of election year politics, misunderstanding of the facts, or anti-foreign bias.
- 2.
- The minority attitude (Mundt, Bender) while helpful has not been particularly effective.
- 3.
- The facts of the case are:
- (a)
- All possible information has been made available and the Executive Branch has endeavored to cooperate completely with the Committee.
- (b)
- The only information (apart from privileged internal working papers) which has not been made public, but which has been offered to the Committee on a classified basis, are the 1952 and 1954 international lists of items which are actually banned for shipment to Russia or the satellites, and an explanation of the changes. These lists are in most particulars identical with the Battle Act lists, which have been furnished over a period of several years to six different committees of Congress. The Subcommittee has also been given the classified report on the 1954 negotiations previously sent to the six committees by Mr. Stassen. (No inquiry has been made into the Chinese Communist control lists. This may come later.)
- (c)
- The Committee has been told repeatedly that the reason we cannot make the control list public is that, in order to get a voluntary system of strategic controls in the first place, we had to agree with 14 of our allies that we would keep it on a classified basis. Publication of the list would make it difficult for some of the cooperating governments to continue to resist internal and external pressures for further reductions.
- (d)
- Enforcement against direct or indirect shipment of items on the control list appears to be satisfactory.
- (e)
- Information on approvals of quantitative control and watch list items is included in confidential reports by participating countries to the Paris committee. Information on shipments of items which are not controlled is readily available through published figures of the Bureau of Foreign and Domestic Commerce, Department of Commerce.
- (f)
- Many items deleted from the control list or down-rated were those of which the Soviets had an exportable surplus. An example is petroleum2 and its products, of which Russia and the European satellites exported $100 million last year.
- (g)
- Exports to the bloc of downgraded items have been small, except in one item—copper wire. This item was deleted in 1954, on the assurance of the UK that shipments would not be consequential. The 5 other categories of copper were retained on the list. Since August 1954, the license approvals by Western European countries for copper wire exports to the Soviet bloc have amounted to approximately 125,000 tons, valued at approximately $125 million; actual shipments have been somewhat less. (This could be a serious situation, and we are endeavoring to have it put back on the list, although the UK can be expected to continue to resist strenuously.)
- 4.
- Internal and external pressures on many of our allies to trade with the bloc are very great. In many cases trade patterns have been built up over a period of a century or more.
- 5.
- Our principal allies in Europe, who carry on the bulk of the trade with the bloc, no longer receive economic aid from the US.
H.