Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

131. Memorandum From the Chairman of the Economic Defense Advisory Committee (DeLany) to the Chairman of the Council on Foreign Economic Policy (Randall)¹

EDAC D–122/2

Washington, August 10, 1956.

SUBJECT

• CFEP 501—East-West Trade

REFERENCES

1)

Memorandum, same subject, dated August 7, 1956, from Secretary, CFEP, to Chairman, EDAC²

2)

Memorandum, subject: China Trade Control Problems, from State Department to Chairman, CFEP, dated August 7, 1956³

1. As requested by reference 1) above, the Economic Defense Advisory Committee has reviewed the State Department proposal in reference 2) above. The Japanese List of 19 items mentioned in paragraph 2. (1), ED/EC D–102, is attached as Annex A.⁴ A brief definition of the exceptions procedures set forth in COCOM Documents 471 and 782 is attached as Annex B.⁵

2. The Department of Agriculture, the International Cooperation Administration and the Battle Act Office (EDAC Chairman) concur with the State proposal and recommend its adoption by the CFEP. CIA did not take a position since they do not participate in policy decisions.

3. The Treasury Department nonconcurs with the State Department proposal. The Treasury Department believes it highly unlikely that the negotiations recommended by the State Department would result in an interim agreement before the end of November, by which time a new U.S. policy can be expected. The Treasury Department further believes that, if an interim agreement were achieved, it would result in official U.S. blessing to a further “watering down” of the controls. Treasury recommends that the present policy continue to apply for the interim period and that the U.S. continue to oppose extended use of CHINCOM exceptions.

4. The Department of Commerce, which is generally sympathetic to the State proposal, nonconcurs in that proposal. The Department of Commerce recommends that the statement of the problem be revised and that certain substantive changes be made in the proposed U.S. interim position. These changes are set forth in Annex C (attached).⁶ These changes are suggested in order (1) to clarify the statement of the problem to which the interim position is directed; (2) to provide greater leeway in developing a list of items for which increased exceptions might be made; (3) to make more specific the undertaking of the negotiators to seek support for the U.S. objectives agreed earlier by the CFEP; and with respect to copper, to make quantitative control a retreat position and to use therewith a specific global quota proposal of 10,000 tons; and (4) to clarify the procedural steps whereby the final U.S. position would be determined and introduced into CHINCOM. Commerce would require the State Department to hold all “discussions” ad referendum and, on completion, seek CFEP and NSC approval of a U.S. interim position to be placed before CHINCOM “at the earliest opportunity.”

5. The Defense Department nonconcurs in the approach proposed by State and recommends that an aide-mémoire (draft attached as Annex D)⁶ be dispatched at high government levels to CHINCOM members (except Japan) designed to gain agreement:

a. To refer the China trade controls to the North Atlantic Council in line with the 5 May 1956 agreement “to strengthen economic cooperation between member countries, to seek to eliminate conflict in their international economic policies and to promote conditions of stability and well-being”; or

b. To an alternative new proposal that the U.S. is willing to discuss with the other Participating Countries a uniform COCOM/CHINCOM List under altogether new criteria for international controls; and

c. In either case to reduce the current rate of CHINCOM exceptions pending a resolution.

If the foregoing recommendation is accepted as a U.S. course of action, the Defense Department would agree to the State Department proposal for an interim policy.⁷

1. Source: Eisenhower Library, CFEP Records. Secret.
2. In this memorandum, Randall requested DeLany to have EDAC comments on the Department of State proposals regarding China trade controls. (Ibid.)
3. Supra.
4. Dated June 14, not printed.
5. Not printed.
6. Not printed.
6. Not printed.
7. On August 10, Cullen forwarded the EDAC paper of August 10 and the Department of State paper of August 7 to the CFEP as CFEP 501/12. They were discussed at the Council meeting of August 14; see infra.