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

133. Instruction From the Department of State to Certain Diplomatic Missions¹

CA–2286

Washington, September 11, 1956.

SUBJECT

• China Trade Controls Problem

1. Following the Eden-Eisenhower talks early this year the U.S. undertook a review of the special China trade controls to determine whether some relaxation in these controls could be agreed while at the same time retaining a substantial and meaningful CHINCOM differential. The interested Washington agencies studied the lists of items proposed for deletion by the UK and Japan, examining both the strategic considerations as viewed by the U.S. and the commercial interests of the participating countries (PC’s).

2. An initial position was discussed with the UK and Japan in early May, but the proposals made by the U.S. at that time proved unacceptable. A subsequent review of the problem has resulted in a new interim U.S. position recently approved at the highest levels within the U.S. Government.

3. In carrying out this continuing study of the China control problem the U.S. has had the following basic considerations in mind:

a. The maintenance of effective CHINCOM controls is important to current U.S. foreign policy.

b. From the strategic and the U.S. domestic political points of view, no substantial reduction in CHINCOM controls should occur at this time.

c. From an economic standpoint, it is only with respect to Japan—and then only to a moderate degree—that it can be estimated that a relaxation of CHINCOM controls would result in an expansion of a Free World country’s foreign trade significant in proportion to the present total of such trade.

d. Pressures both political and commercial are nevertheless being exerted on participating governments to achieve a major reduction of CHINCOM controls; in order to prevent serious deterioration of multilateral cooperation resulting from these pressures, the U.S. would be willing to concur in some relaxation in CHINCOM controls provided that

(i) a substantial CHINCOM differential control is retained;

(ii) the current deterioration of the CHINCOM control system is stopped and the control system is thereby increased in effectiveness;

(iii) the over-all CG/COCOM/CHINCOM activity is strengthened materially to the extent determined by the U.S. Government to be practicable.

e. Negotiations, both bilateral and CG/CHINCOM, should be conducted in such manner as to assure a reasonable degree of relief for Japan and some participation in trade by the other PC’s without appearing to show any obvious preference for any PC.

4. Pending development of a more long-term policy by the U.S. on the China trade control question now being considered by interested Washington agencies, bilateral representations will be made to all the CHINCOM countries regarding the following interim course of action:

a. Agreement will be sought for a general interim policy as follows:

The PC’s

(i) 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;

(ii) will permit only limited quantities of Document 782 items to be shipped and those to be judged on a case-by-case basis; and

(iii) will have regard for 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.

b. In return for agreement by the other PC’s on the general formula set forth in paragraph 4 (a) above, the U.S. would agree

(i) to participate in a CG meeting by the end of the year to seek a definitive settlement of differences between the U.S. and other PC’s on the China trade control problem;

(ii) not to object to exceptions cases meeting the standards outlined in paragraph 4 (a). In fulfilling the latter commitment the U.S. as a general rule would refrain from raising objections to Document 782 cases unless there is clear evidence that the standards listed in paragraph 4 (a) are not being met. Cases under other exceptions procedures would be considered on their merits and in accordance with existing criteria.

c. The negotiating objectives in other areas (e.g. copper wire, shipping, etc.) discussed earlier with the U.K. and Japan should not be considered as sine qua non for purposes of 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.

5. In order to control the consistency of the bilateral discussions they will be conducted by the Department in Washington beginning this week. USDEL and the Missions will be advised of the progress of these talks.

6. The addressee posts (CHINCOM countries only) may use the substance of the above as background in any informal discussions they may have with the governments concerned. Similarly USDel may advise the Chairman of CHINCOM of the U.S. position and may inform the other Del’s as appropriate.

Dulles

1. Source: Department of State, Central Files, 493.009/9–1156. Confidential. Drafted by Knoll and approved by Kalijarvi. Sent to Ankara, Athens, Bern, Bonn, Brussels, Copenhagen, Geneva (for Johnson), The Hague, Helsinki, Hong Kong, Lisbon, London, Luxembourg, Paris (pass to USRO/ST), Oslo, Ottawa, Rome, Stockholm, Tokyo, and Vienna.