Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

319. Memorandum of Conversation⁰

Ankara, January 30, 1958.¹

SUBJECT

• Strategic Trade Controls

PARTICIPANTS

• The Secretary
  • William Rountree
  • Frederick Reinhardt
• The British Foreign Secretary
  • Sir William Hayter
  • Mr. Denis Laskey

Mr. Lloyd said the U.S. had now introduced a new theory into the problem of strategic trade controls, namely, limitation of the growth of the Soviet industrial base. He thought the China List had been a good example of how to handle the matter. U.S. action in that case had resolved the whole problem for him and he was no longer attacked with complaints about the U.S. attitude on China. Some of his colleagues, he continued, thought we should seek to improve relations with the Soviet Union through trade. He thought it unlikely you would really widen the Soviet industrial base very much by relaxing trade controls. The Czechs were offering for sale in the U.K. certain machine tools that were on the list. He thought a little more trade would probably be a good thing.

Sir William Hayter observed that the Soviet industrial base was so large that it was questionable whether one could make any significant effect on it, while at the same time the internal level of consumption was so depressed.

The Secretary said his own disposition which he believed was also that of the President was to take a more liberal view of this general matter. Yet the U.S. Government was up against violent opposition in Congress. Furthermore, there was the problem of the Battle Act² which became operative if an item were removed from the international list without U.S. agreement. The Secretary said that we had considered the copper wire exports to the Soviet Union a serious business because it had facilitated their putting their communications underground. Mr. Lloyd replied that this trade in copper had meant 20 million pounds for the economy of Southern Rhodesia.

Mr. Lloyd believed it was not possible for the U.S. and the U.K. to resolve their difference in this field through COCOM. He agreed it must be done at a higher level and he hoped it would be possible to get together before the February meeting. He had heard that Mr. Dillon was coming to London shortly for some meeting and thought that might be a good opportunity to deal with the matter.

0. Source: Department of State, Central Files, 460.509/1–3058. Secret. Drafted by Reinhardt.
1. Dulles was attending the Baghdad Pact Ministerial Meeting as head of the U.S. Observer Delegation.
2. The Battle Act, formally entitled the Mutual Defense Assistance Control Act of 1951, stipulated that U.S. military, economic, and financial assistance be terminated to a nation which knowingly permitted shipments of an embargoed item to a country threatening the security of the United States. (65 Stat. 644)