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

330. Memorandum of Discussion at the 371st Meeting of the National Security Council⁰

July 3, 1958.

[Here follow a list of participants in the meeting, a list of persons present only for items 2 and 3, and agenda items 1–5.]

6. U.S. Economic Defense Policy (NSC 5704/3)¹

Referring to the forthcoming visit of himself and the President to Ottawa,² Secretary Dulles predicted that one of the most important questions on the agenda would be the difference between U.S. policy and Canadian policy with respect to trade with Communist China. The Chinese Communists are making apparently attractive offers of trade with Canada, including offers to Canadian subsidiaries of U.S. corporations. Therefore, the President may feel that he will have to relax our existing policy, which prevents trade with Communist China by Canadian subsidiaries of U.S. corporations, and provide licenses for such companies.

Secretary McElroy commented that he did not himself see how we could expect U.S. corporations having subsidiaries operating in a foreign country to operate under any other law than the law of the country in which the subsidiary was located.

Secretary Dulles added the information that this problem had been thoroughly discussed by the State Department with the Treasury Department.

The National Security Council:³

Noted and discussed an oral statement by the Secretary of State that the United States, in forthcoming meetings with the Government of Canada, may deem it desirable in the national interest to relax its policy with regard to trade with Communist China by Canadian subsidiaries of U.S. corporations.

S. Everett Gleason

0. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Drafted by Gleason on July 5.
1. See footnote 1, Document 320.
2. President Eisenhower and Secretary Dulles visited Ottawa, July 8–11, for discussions with Canadian officials. Eisenhower and Prime Minister Diefenbaker discussed the question of trade with China on July 8 and 10. Secretary Dulles and Secretary of State for External Affairs Sidney E. Smith discussed the question of COCOM on July 10. Memoranda of these conversations are scheduled for publication in volume VII, Part 1. On July 9, the United States and Canada issued a joint press statement as follows: “The Canadian and United States Governments have given consideration to situations where the export policies and laws of the two countries may not be in complete harmony. It has been agreed that in these cases there will be full consultations between the two Governments with a view to finding through appropriate procedures satisfactory solutions to concrete problems as they arise.” (American Foreign Policy: Current Documents, 1958, p. 470)
3. The following paragraph constitutes NSC Action No. 1944, approved by the President on July 7. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)