129. Memorandum From the Deputy Under Secretary of State for Economic Affairs (Prochnow) to the Secretary of State1
SUBJECT
- China Trade Control Policy
The negotiating position set by the NSC on April 26, 1956, whereby the United States would tolerate exceptions for a list of 81 items in return for obtaining agreement to embargo of copper wire and to certain other negotiating objectives, has been tried with the UK and Japan. It was acceptable to neither. The UK rejected the US proposal; the Japanese wished to expand the list of 81 items subject to liberalized exceptions. A new interim policy is necessary as a basis for renewed talks with the UK, Japan and other CHINCOM countries, if the United States is to forestall a further onslaught by other countries upon the China controls when the CHINCOM resumes its meetings the end of August.
The attached memorandum sets forth an interim course of action for approaches to other countries pending development of definitive policy recommendations by the Economic Defense Advisory Committee by October 31 in accordance with a CFEP assignment of July 31. The proposal represents an easement in our earlier negotiating position (including a change to quantitative control for copper wire). In substance we would attempt to find a formula for restraining the use of exceptions, either through an expanded list of [Page 386] items subject to liberalized treatment or, failing that, through a more general undertaking.
The attached recommendation is supported by both EUR and FE. It will probably be opposed by Defense, and possibly may be opposed by Commerce.
Recommendation
That you sign the attached memorandum to the Chairman of the CFEP.2