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

323. Memorandum From the Secretary of the Council on Foreign Economic Policy (Cullen) to the Council⁰

CFEP 566/2

February 13, 1958.

SUBJECT

• CFEP 566—U.S. Economic Defense Policy

1. On February 6, 1958¹ the Chairman of the Council on Foreign Economic Policy established a Committee consisting of Mr. Douglas Dillon, Deputy Under Secretary of State—Chairman; Mr. Mansfield Sprague, Assistant Secretary of Defense; and Mr. Walter Williams, Under Secretary of Commerce to study and submit recommendations concerning a proposal by the United Kingdom to reduce substantially the existing levels of multilateral controls covering trade with the Sino-Soviet bloc.

2. Essentially the British proposal is to reduce International List I from 181 to 31 items plus, perhaps, parts of another 62 items and to eliminate entirely International Lists II and III.²

3. The recommendations of the CFEP Committee are as follows:

a. State and Commerce recommendations

(1) Seek to restore the community of design and purpose essential to the effective functioning of the multilateral security trade control system.

(2) Obtain the maximum possible agreement on the part of the COCOM countries with our revised criteria, lists and administrative and exceptions procedures. (Contained in EDAC D–142)³

(3) Continue to participate in the multilateral organization and control system so long as that system serves to impose worthwhile restrictions on the Sino-Soviet bloc.

(4) In the conduct of the present and forthcoming negotiations it will be necessary for both the United States and other participating governments to remain flexible in their objectives if multilateral agreement is to be reached. While pressing for the maximum objectives, United States negotiators are authorized ad referendum to the appropriate interagency forum, to restrict the scope and severity of proposed controls.

(5) Recognize the probable necessity for adjusting the scope and severity of United States controls to the Sino-Soviet bloc to those agreed multilaterally plus unilateral United States controls toward the bloc where beyond question such controls will be effective in advancing our security objectives.

(See Tab A attached.)⁴

(b) Department of Defense recommendations

(1) Continue to discuss in COCOM and bilaterally with the U.K. and other COCOM countries (with emphasis on the latter) the U.S. position as outlined in EDAC D–142, stressing the basic principles and objectives of the trade control program, in order to attempt to revitalize the security as opposed to the commercial aspects of the controls.

(2) Request a Consultative Group meeting as soon as possible to attempt to reconcile the divergent views on basic policy as revealed in COCOM and bilateral discussions.

(3) If the Secretary of State determines after a CG meeting that further pursuit of the U.S. objectives threatens to become seriously divisive to the point where important mutual security relationships are endangered, he shall request the agencies principally concerned to consider alternatives.

(4) No change in current U.S. policy is required at this time. (See Tab B attached.)⁵

4. These recommendations will be considered by the Council on Foreign Economic Policy on February 14, 1958.

Paul H. Cullen

0. Source: Department of State, S/P-NSC Files: Lot 62 D 1, U.S. Economic Defense Policy. Secret.
1. See footnote 5, Document 322.
2. Under the strategic control system as revised by the nations of COCOM in 1954, 181 items on International List I were totally embargoed to the Soviet bloc; 25 items on List II were under quantitative control; and 63 items on List III were under surveillance.
3. EDAC D–142, January 17, was a memorandum from the Chairman of the Economic Defense Advisory Committee to the Chairman of the Executive Committee of the EDAC. It consisted of a 9-page statement of the basic elements of the multilateral control structure and four annexes: annex A, a proposed rewording of the criteria; annex B, proposed International List changes; annex C, proposed revisions of Administration Procedures; and annex D, proposed revised exceptions procedures. In all, the U.S. position as recommended in EDAC D–142 contemplated 141 items in List I, none in List II (although most of the items dropped were transferred to List I or List III), and 53 on List III. (Department of State, E/CFEP Files: Lot 61 D 282A, U.S. Economic Defense Policy, CFEP–566)
4. Tab A contained the report of the Committee, February 13, with the Departments of State and Commerce recommendations which are printed above.
5. Tab B contained a revision of the report by Irwin, February 13, which substituted the Department of Defense recommendations, which are printed above.