Office of the Historian

132. Minutes of the 46th Meeting of the Council on Foreign Economic Policy, Executive Office Building, Washington, August 14, 19561

Washington, August 14, 1956

PRESENT

  • Clarence B. Randall, Special Assistant to the President—Chairman
  • Herbert V. Prochnow, Deputy Under Secretary of State
  • Sinclair Weeks, Secretary of Commerce
  • True D. Morse, Under Secretary of Agriculture
  • Dennis A. FitzGerald, Deputy Director, International Cooperation Admn.
  • Reuben B. Robertson, Jr., Deputy Secretary of Defense
  • Arthur S. Flemming, Director, Office of Defense Mobilization
  • Percival F. Brundage, Director, Bureau of the Budget
  • Dillon Anderson, Special Assistant to the President
  • Gabriel Hauge, Administrative Assistant to the President
  • Joseph S. Davis, Member, Council of Economic Advisers
  • Felix E. Wormser, Assistant Secretary of the Interior
  • Andrew N. Overby, Assistant Secretary of the Treasury
  • Paul H. Cullen, Secretary, Council on Foreign Economic Policy, and their assistants

[Here follows discussion of the first three agenda items on unrelated subjects.]

IV. CFEP 501—East West Trade.

1.
The Council considered the recommendation of the Secretary of State for an interim policy on the China trade control problem contained in CFEP 501/12 dated August 10, 1956.
2.
The Council approved the following interim course of action:
a.
Settlement should be made with the Japanese on the basis of adding to the original United States list of 81 items as many of the 19 items covered by the 782 procedure as necessary, the Japanese thereafter to support the United States in efforts to gain acceptance of this list by other participating countries.
b.
The list as amended should be proposed to other participating countries (the United Kingdom to be approached last) as a basis for United States non-objection to CHINCOM exceptions. It should be understood that the list might be expanded in the course of discussions with other countries by an additional limited number of items subject to the 782 procedure (in the range of ten to twenty items of interest to countries other than Japan) to permit the development of an agreed list.2
c.
The negotiating objectives set forth in paragraph 3(b) of the CFEP report of April 6, 1956 should not be considered as a sine qua non for purposes of the interim policy, but instead as objectives to be pursued on their merits at the most propitious time; the objective for copper wire specifically to be changed from embargo to quantitative control.
d.

If the attempt to develop a list of items for liberalized exceptions treatment is not successful, agreement should then be sought for a more general interim agreement as follows:

(1) The United States would seek agreement that the participating countries:

(a)
will be discriminating in their use of the exceptions procedures so as to avoid vitiating the central purpose of the multilateral China controls pending definitive discussion of the problem;
(b)
will permit only limited quantities of items to be shipped and these to be judged on a case-by-case basis; and
(c)
will have regard to the contribution which the item may make to the military strength of Communist China in accordance with a strict interpretation of the CHINCOM exceptions procedures.

e.
In return for agreement by other participating countries either on a specific list or on the more general formula set forth in subparagraph d, the United States would agree:
(1)
to participate in a CG meeting by the end of the year to seek a definitive settlement of differences between the United States and other participating countries on the China trade control problem;
(2)
not to object to reasonable shipments of items appearing on the agreed list provided for in subparagraph b or alternatively, to exceptions cases meeting the standards outlined in subparagraph d. (In fulfilling the latter commitment relating to subparagraph d the United States as a general rule would refrain from raising objections to Document 782 cases unless there is clear evidence that the above-listed standards are not being met.)
3.
This recommendation will be submitted to the NSC for approval.3
Paul H. Cullen
Lt. Col., USA Secretary
  1. Source: Eisenhower Library, CFEP Records. Secret.↩
  2. It should be noted that certain of the items appearing on the original list of 81 (about 34 items) are subject to the Document 471 prior consultation, quid pro quo justification. These items are of significantly less strategic importance than is the case with Document 471 items generally. In order to preserve the effectiveness of the Document 471 exceptions procedure, an adjustment should be made in CHINCOM (assuming agreement on a liberalized exceptions list) to make clear that the 34 items in question would be subject to the Document 782 ex post facto notification procedure rather than the stricter 471 procedure. [Footnote in the source text.]↩

  3. In a memorandum to Dillon Anderson, August 17, Randall explained that he met with Eisenhower that afternoon concerning Dulles’ recommendation for an interim policy on the China trade control problem that the CFEP approved on August 14. Randall noted that he “explained to the President that since a decision was needed prior to the CHINCOM meeting scheduled for August 27, we had agreed that the CFEP recommendation should be submitted to him rather than to wait for the next meeting of the NSC which is expected to be held on August 30.

    “The President approved the CFEP recommendation and asked me to advise you of his decision.” (Department of State, S/S–NSC Files: Lot 62 D 1, Communist China: Multilateral Export Controls on Trade with)

    Lay forwarded Randall’s August 17 memorandum to Dillon as well as the approved interim policy on China trade control, CFEP 501/12, to the NSC on August 17, under cover of a brief memorandum. (Ibid.)

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