94. Memorandum of a Conversation, White House, Washington, January 31, 1956, 2:40 p.m.1


  • US
    • President Eisenhower (where indicated)
    • Secretary Dulles
    • Under Secretary Hoover
    • Ambassador Aldrich
    • Mr. Murphy
    • Mr. Prochnow
    • Governor Stassen
    • Mr. Reuben Robertson
    • Admiral Radford
    • Mr. MacArthur
    • Mr. Merchant
    • Mr. Wilcox
    • Mr. Allen
    • Mr. Bowie
    • Mr. Hagerty (in part)
    • Mr. Goodkind
    • Mr. Timmons
    • Mr. Lister
    • Mr. Cottman
  • UK
    • Prime Minister Eden
    • Foreign Secretary Lloyd
    • Ambassador Makins
    • Sir Harold Caccia
    • Sir Leslie Rowan
    • Sir Hubert Graves
    • Mr. Evelyn Shuckburgh
    • Mr. Ian Samuel

[Here follow a list of subjects discussed and discussion of unrelated subjects.]

China Trade Controls

The President presided and Prime Minister Eden headed the British Delegation.

As soon as the President had arrived, the Secretary of State broached the problem of China trade controls. He summarized the discussion of this subject which had taken place between himself and Foreign Minister Selwyn Lloyd, together with their advisers, [Page 309] during the morning conference. The Secretary said that he had painted the broad United States approach to the whole China problem and on the subject of trade controls had indicated the United States belief that we tend to collapse our position if we should reduce the CHINCOM controls. He indicated that the morning discussion had also touched on the problem of rubber trade, particularly in relation to Ceylon and Malaya.

The President then broke in to say that he felt that if we did not let Japan trade with Communist China, we would be in for serious trouble. At the same time, he said, our people, especially Admiral Radford, think that any weakening on our part, either with respect to our economic pressures or our political pressures, would be extremely bad for our position in Asia. The only thing we have out there, the President said, is our reputation for standing by our word. If we begin to pull back and to raise doubts whether we will stand by our moral positions and support other peoples, the Asians, according to Admiral Radford’s evaluation, will leave us like flies.

The President admitted that he did not see how to correlate this appraisal of Admiral Radford’s with the Japanese problem. Likewise, in connection with rubber, if we let one country sell rubber to Communist China, it would seem that we should let others do so.

The President said he had lots of studies going forward on these problems, but as of now he did not see how to straddle them.

Prime Minister Eden said that he had two problems: There was the question of United Kingdom trade, but this trade with Communist China was not really important. On the other hand, the trade of British Colonies was more important. He pointed to the posture of Ceylon, noting that Ceylon had flouted the United Nations embargo against Communist China with respect to rubber and yet on all other counts was one of the most anti-Communist of all nations. The incongruity was deepened then when you considered Malaya, which was restrained from trading in rubber with Communist China, notwithstanding the case of Ceylon.

Prime Minister Eden said that what he proposed was to drop part of the China list now; the rest could be dropped later so long as we show now the thing is moving along.

At this point the President inquired why rubber was still considered so strategic in view of synthetic production.

Mr. Robertson, of the Defense Department, replied that the Russian synthetic industry was not sufficiently large to supply their demands.

Prime Minister Eden pointed out that there was no restriction on Russian purchases of rubber from the Free World. All I am trying to do, he said, is to get these control lists nearer together.

[Page 310]

The President asked the Prime Minister what else he would want to take off the China trade control list besides rubber.

Prime Minister Eden alluded to a number of priority items and handed the President a list of them (this list is the one attached to the United Kingdom aide-mémoire recently delivered by Mr. Coulson to Mr. MacArthur.2 The list sets out the items under China control which the British propose removing from such control during the first six months of a period of proposed alignment of the control lists).

Prime Minister Eden commented that all the items set out on the list he handed to the President already stood free of control to Soviet Russia.

The President asked whether the Communist Chinese did not have to pay for the things which they imported—whether they did not have to devote materials and resources to such procurement. Who does this trade help the most, the President asked.

Mr. Prochnow pointed out that the Communist Chinese were struggling to industrialize and to accomplish this change in their economy rapidly. In this connection they were desperately eager to procure many industrial items now embargoed by the differential controls. It was felt, therefore, that in the light of this need, the net gain in such trade would be greater for the Chinese Communists.

The President commented that we were trying hard to help Indochina, Burma and other countries in Southeast Asia, and it might help them economically if they were able to sell to Communist China various raw materials which he saw noted on the Prime Minister’s list.

The President then said to the Prime Minister that we have a number of inter-departmental committees which study these problems, that one of them is chaired by Mr. Joseph Dodge and that he would like to have the opportunity to give Prime Minister Eden’s list to Mr. Dodge and to ask him what the removal of these items from control would mean, both to the Communist Chinese as well as to the Free World. In particular the President said he would like to know what items on this possible de-control list would favor Japan. When he had the answer to these questions, we should take a look at the problem to see what we can do.

Secretary Dulles then said that there were several points of concern to him which related more to method. First, he felt that the study of the list and of these problems should take place at the staff level. Secondly, any action that might be taken toward de-control ought to be accomplished on a gradual basis, so as to avoid any indication that we have undergone a change in political attitude. In [Page 311] the third place, in our control system against the European Soviet bloc, we have employed various types of control, and the Secretary asked whether we might not draw from those principles in relation to China. Specifically, he inquired whether we might not use quantitative controls on some of the items.

When the Secretary alluded to the types of control applied in COCOM, the President interjected a comment on copper wire, which he said he noted had been getting out of control. Reference was then made to rubber, and Prime Minister Eden indicated that a quantitative control system for rubber could be managed by the United Kingdom. The President commented that we could then assign a quantity to Malaya for export. Secretary Dulles commented that we were now in the position of wanting to aid Ceylon economically, but that we had the problem raised by our legislation, and it was indeed ironical that we were hampered in sending aid to Ceylon, who, as Prime Minister Eden had pointed out, was so thoroughly anti-Communist.

The President noted somewhat jocularly that his Secretary of Commerce doubtless would complain about a reduction in the international controls, since he frequently pointed out the discrimination against American businessmen which resulted from the fact that we maintained a complete embargo against Communist China while other countries permit their businessmen to conduct trade within certain limits.

The President then asked Prime Minister Eden what Malaya might expect to receive from Communist China in return for rubber. Prime Minister Eden said he did not know, but possibly it would be rice, soybeans and other food products. Malaya, he said, did not produce very much food.

Secretary Dulles jokingly commented that if Malaya were short of rice, we had a little too much of that commodity and would be glad to supply it, and at a very cheap price too. He then went on more seriously to say that Communist China was short of foreign exchange and probably would wish to barter, in which case they would probably offer food, letting their own people starve.

The President then turned to the Secretary of State and said, “This is what I want you to do; get in everyone, get in the Defense people and the others, and see what we can do to back away from this thing”.

Prime Minister Eden said there was one further point that he wanted to cite to illustrate his concern. This was the case of Hong-Kong, where the population has been greatly swelled by the movement of refugees and where the whole life of the colony and its ability to feed this large population depended on foreign trade.

[Page 312]

Secretary Dulles then asked Prime Minister Eden whether he would agree to the gradual basis for any action in reducing the trade controls. The Prime Minister replied that he did agree and that all he wanted was to get the matter moving. Secretary Dulles said it would be very important to avoid any indication that there has been a change in policy. The President said that our technical experts were studying these matters all the time and making adjustments in controls. Surely we cannot say that we made a flat decision in 1952 that cannot be altered in any detail.

Secretary Dulles again stressed that it would be important not to let the press give the impression that we had made a change of position.

Mr. Prochnow also pointed to the importance of working out the action to reduce the controls on a multilateral basis. The President echoed this thought and stressed the importance of getting the Japanese representatives into the formulation of the adjustments.

With respect to any publicity, the President then said we should make the answer that we have made no change in our general policy, but that we have turned the problem over to the experts to see if any actions beneficial to the Free World can be made within the four corners of that policy. We are then going to see what the technicians say to this.

Prime Minister Eden commented that he was old-fashioned enough to believe that trade was good for people; surely the United Kingdom had not lost through the development of trade.

The President responded that he recognized that a desperate need on the part of the Chinese Communists for particular items might make a difference in the appraisal as to where the balance of advantage might lie in a particular course of trade. He, himself, was always trying to ascertain what that balance of advantage was. He did not wish to help the Communist Chinese, but he did wish to help ourselves.3

[Here follows discussion of unrelated subjects.]

  1. Source: Department of State, Conference Files: Lot 62 D 181, CF 648. Secret. Drafted on February 7; no other drafting information is given on the source text.
  2. See footnote 4, Document 88.
  3. Another memorandum of this conversation, drafted by Goodkind, is in Department of State, Central Files, 493.009/2–156.