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

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

Washington, January 4, 1957.

Upon my return from my Pacific trip,² I find your memorandum of December 20³ advising that the Economic Defense Advisory Committee has adopted a State Department proposal to hold bilateral discussions with Consultative Group member governments with the objective of an overall tightening of multilateral controls, offering participation in an early CG meeting if necessary to achieve this objective.

This disturbs me.

In my view, EDAC has thus taken a substantive position which, in my judgment, lies beyond its frame of reference.

Discussions of this subject, initiated before the CFEP, had for their purpose the re-examination of the question of whether or not the China differential should be reduced, or even perhaps eliminated. EDAC has foreclosed that by adopting the State Department proposal that bilateral discussion should go forward on the hypothesis that there should be no change in the differential, and that the current exceptions policy should be tightened.

The reason why I am disturbed at the action taken by EDAC is that the President has made it quite clear to me, and to members of the National Security Council, that he believes that controls over trade with the Communist countries should be somewhat liberalized rather than tightened.

I recognize, however, that because of my absence, you were unable to consult with me at the time of the EDAC meeting, and that the viewpoint I am here expressing was not available either to you or to the membership, so I do not ask that what you did be rescinded.

It does seem to me, however, most urgent that EDAC proceed promptly to consider the formulation of an over-all economic defense policy, pursuant to the request made earlier by CFEP. Surely such a policy should be available in advance of the expected CG meeting for the guidance of those who will there represent the United States.

I shall be prepared to call a meeting of the CFEP for the consideration of the recommendations of EDAC for such an overall economic defense policy as soon as they are ready. In view of the fact that a CG meeting is expected early this year, this policy should be submitted to the CFEP by January 31, 1957.

In case it is impossible for EDAC to arrive at consensus, you may submit the matter to the CFEP with majority and dissenting viewpoints.⁴

CBR

1. Source: Department of State, Economic Defense Files: Lot 64 D 234, Policy Review Papers—NSC 5704/1. Secret.
2. Randall made a trip to several Asian countries in December 1956 to discuss Far Eastern economic issues with officials serving in the area. Documentation on his trip is in Washington National Records Center, ICA Director’s Files: FRC 61 A 32, Box 314, Randall folder.
3. Not printed. (Ibid., Box 312, Trade/East-West)
4. In his memorandum to Randall of January 8, DeLany replied in part as follows: “Your memorandum will be given EDAC distribution, inviting particular attention to that paragraph which refers to liberalization of controls towards Communist countries and to the paragraph expressing your desire to have the recommendation of EDAC for an overall economic defense policy by 31 January 1957. Effective work can be accomplished only after the results of the current bilaterals are determined by the responses of other governments. I shall keep you advised of the progress.” (Ibid.)