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

154. Memorandum of a Conversation, Department of State, Washington, April 9, 1957¹

Washington, April 9, 1957

SUBJECT

• China Trade Controls

PARTICIPANTS

• Foreign Affairs Committee
  • Rep. Thomas S. Gordon, Chairman
  • Rep. Robert B. Chiperfield
  • Mr. Boyd Crawford
• Foreign Relations Committee
  • Sen. Theodore F. Green, Chairman
  • Sen. H. Alexander Smith
  • Mr. Carl Marcy
• Senate Armed Services Committee
  • Sen. Richard B. Russell, Chairman
  • Sen. Leverett Saltonstall
• House Armed Services Committee
  • Rep. Carl Vinson, Chairman
  • Rep. W. Sterling Cole
• Department of State
  • The Acting Secretary
  • Mr. Douglas Dillon, Deputy Under Secretary for Economic Affairs
  • Mr. Roderic O’Connor, Deputy Assistant Secretary for Congressional Relations
  • Mr. Robert B. Wright, Chief, Economic Defense Division
• International Cooperation Administration
  • Mr. John B. Hollister, Director of International Cooperation
  • Admiral Walter S. DeLany, Deputy Director for Mutual Defense Assistance Control
• Department of Defense
  • Mr. Mansfield D. Sprague, Assistant Secretary for International Security Affairs
  • Mr. Charles A. Sullivan, Director, Office of Special International Affairs
• Department of Commerce
  • Mr. H. C. McClellan, Assistant Secretary for International Affairs Mr. Frederick C. Nash, General Counsel

The Acting Secretary explained that the meeting had been arranged to discuss with the appropriate Congressional committees the problem of the multilateral Communist China trade control differential prior to making any U.S. proposals for changes in the international controls. He asked Mr. Dillon to present the matter.

Mr. Dillon explained that there is no plan for making changes in the United States controls towards Communist China, and that the problem relates only to the pressures by other countries for a relaxation of the multilateral CHINCOM embargo. He presented the problem which the United States faces in the CHINCOM forum, emphasizing the following elements:

1. During the Korean war the CHINCOM countries added to the embargo list applicable to Communist China many items which were controlled to a lesser degree or not at all to the European Soviet bloc.

2. The revision of the COCOM lists in 1954 increased the China differential embargo by removing items from the COCOM lists but not from the CHINCOM list.

3. The other participating countries have criticized the present situation under which there are some 207 items on the China embargo list but not on the COCOM lists. These items, other countries argue, can be purchased by the Soviet bloc and transshipped to Communist China, thus vitiating the CHINCOM embargo.

4. Other countries have made increasing use of the exceptions procedures to ship items to China usually over U.S. objection, a situation which has weakened the general control structure.

5. The British at Bermuda made it clear that they consider the time for change is overdue in light of U.S. willingness fifteen months ago to review the question.

6. The French will be setting forth proposals on April 12 for the removal of the differential in steps. The prospect is that virtually all other countries in the group will support the French proposal unless we have a concrete counterproposal.

Mr. Dillon then set forth the proposal which the executive branch has arrived at for continuing the embargo to China on all three International Lists, decontrolling the 207 items except those which we can demonstrate as being strategic enough to add to one of the COCOM International Lists (presumably the lower List II or List III categories), and tightening up the exceptions procedure. He indicated that an initial selection of approximately 40 items had been made by U.S. technicians, but the addition of those items to the lists would depend upon the success of our negotiations.

There were a number of questions by the Senators and Representatives clarifying their understanding of the problem faced by the United States and of the executive branch proposal to meet it. These questions reflected interest from the Congressional side in the following points: the U.S. record of general objection to CHINCOM exceptions, the fact that no relaxation under the Battle Act is involved in the proposed action, the fact that other countries are likely to go their own way unless some modification can be agreed, a belief that the CHINCOM relaxation might be subject to the interpretation of a weakening by the U.S. in its overall policy towards Communist China, and the fact that the proposal has the favorable prospect of adding some items to the COCOM lists. Senator Green noted at the conclusion of the meeting by way of summary that the United States seemed essentially to be faced with a “choice of evils”. It was specifically suggested that as a matter of tactics, it would be more palatable to the U.S. public if the U.S. proposal could be made by some other country as a compromise between extremes. Mr. Dillon said this tactical suggestion would be explored.

It was understood that the Department would put out a brief press statement at the end of the day following consultation later in the afternoon with the Senatorial leadership.²

1. Source: Department of State, Central Files, 493.009/4–957. Confidential. Drafted by Wright.

2. In a memorandum to the President, dated April 10, Acting Secretary Christian Herter noted that when the President approved NSC 5704/1 he directed that the policy should not be implemented prior to discussion with appropriate members of Congress. Herter stated that “those discussions have now taken place” and explained that “the reaction of all the Congressional leaders was strikingly similar in that they seemed to feel that in view of the situation faced by the United States the policy proposed in NSC 5704/1 seemed as good an answer as could be found.” Accordingly, he recommended that Eisenhower authorize the appropriate government agencies and departments to implement the policy contained in NSC 5704/1. (Eisenhower Library, Herter Papers, Chronological File)

   On April 11, the President authorized the implementation of the policy contained in NSC 5704/1. James Lay informed the NSC of the President’s decision in a memorandum of April 11. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5704 Series)