Office of the Historian

177. Memorandum From the Director of the Office of Chinese Affairs (McConaughy) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)1

Washington, June 5, 1957.

SUBJECT

  • Proposed Referral of China Trade Control Policy to the NSC

1. The Problem

In a meeting on June 4 the Executive Committee of EDAC concluded that the US had “pursued to the end” its China trade control policies as set down in NSC Document 5704/1 (Tab A) and, therefore, a further top level directive is immediately necessary.2 It was agreed that the Executive Committee should meet again on June 6 to redraft portions of that document (presumably primarily paragraphs 20 and 21) to reflect the changed conditions.

The discussion leading to this conclusion is summarized in section 2 below.

The Defense member, Colonel Green, reported that he understood that Secretary Wilson is bringing this matter into the NSC directly although he added a caveat that the meeting in which this action is being decided was still in session. (Presumably this would mean by-passing EDAC and CFEP.) After the meeting he also hinted that Admiral Radford was going to the Hill, presumably in part in this connection.

2. Background

The members of the US technical advisers team returning from Paris reported to the Executive Committee of EDAC that CHINCOM is about to have a practical breakdown as a result of unilateral action by one country against the clear majority view that unilateral action is not proper; that the views of the PC’s are mixed partly because of the following reasons:

(a)
Each country faces the problem of coordinating the scope of its own relaxation of controls with the action of the UK.
(b)
France continues to maintain the existing CHINCOM controls principally because of the absence of a duly constituted government rather than for more fundamental reasons.
(c)
Italy did not take a position for similar reasons.
(d)
Japan’s position is conditioned by the impending Kishi visit to the United States.3 (The German position was not mentioned.)

It is under such circumstances, returning team members stated, that the US must face the British desire to establish List II quotas for China immediately.

The Chairman of the Executive Committee proposed, and his proposal was accepted by the Committee, that we had “pursued to the end” the policy outlined in NSC Document 5704/1, and he made specific reference to paragraph 21. The Commerce member noted that even by being present at CHINCOM meetings the USDel would be exceeding its authority; the Chairman added that we must have a change of policy from the top.

The State member brought up the possibility of instructions to the USDel to negotiate further after making it clear to CHINCOM that the USDel is doing so without prejudice to the US position, but in the ensuing discussion the Commerce member held that “no matter how you slice it” the US would be acquiescing to the British action in unilaterally eliminating the China differential. The representative of Commerce on the Paris team added that in his view all further discussion must be preceded by a US policy decision.

3. Possible Next Steps

The following alternatives might be considered prior to NSC action:

A.
To consider the China Committee as effectively terminated due to the consequences of the unilateral action of one power and favor the transfer of the control mechanism on China to COCOM.
B.
Not to accept the view that all NSC authority is now fully exhausted since there still is a possibility to negotiate some token differential. For example, it might be possible to require prior notification to CHINCOM on shipments of certain List II items to China for which no Soviet bloc quotas exist and which are handled in COCOM under ex post facto notification.

The following alternatives might be open to the NSC:

C.
Not to agree to List II quotas for Communist China but be prepared to participate in the examination of the problem. (This attitude can be maintained while the USDel probes views of others.)
D.
The US can recognize that it is faced with a fait accompli and undertake to participate in List II quota negotiations for China. The USDel was informed in paragraph 5 of the Dept’s telegram4 Tab B) that the US would be prepared to participate in quota [Page 473] negotiations for China. This instruction, drafted in E and concurred in by Mr. Dillon and Admiral DeLany (but not cleared by FE), would seem to have anticipated NSC action, if in fact the Executive Committee’s view that further NSC action is mandatory proves valid.)

Conclusion

Alternatives B and C seem to offer tenable temporary positions until the lineup of PC’s whose positions are not clear or final (Canada, Italy, France and Japan) are fully determined. The assumption of such an intermediate position would enable us to support German proposals for the more restrictive handling of List II items. I think that it may be worth while to take now a position valid only in the short run because as indicated by the German example concern at disruption of Western unity may lead to a stiffening attitude on the part of some PC’s. Also, although we do not wish to read too much into it, the UKDel’s statement in CHINCOM May 27 contained a clear implication that UK would be willing to accept low quotas (Tab C paragraph 5).

Recommendation

That you discuss this matter with Mr. Dillon with a view to seeking his agreement for an interim position in order to permit the USDel to explore the situation resulting from unilateral UK action before the necessity for NSC action is considered further.

  1. Source: Department of State, Central Files, 411.93/6–557. Secret. Drafted by Louis Mark, Officer in Charge of Economic Affairs, Office of Chinese Affairs.↩
  2. Minutes of this meeting were not found in Department of State files. There were no tabs attached to the source text.↩
  3. Japanese Prime Minister Nobusuke Kishi was scheduled to visit the United States June 19–21.↩
  4. Reference is to Topol 2299, May 27. (Department of State, Central Files, 493.009/5–2757)↩