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

339. Telegram From the Embassy in the United Kingdom to the Department of State⁰

London, November 17, 1958, 6 p.m.

2698. Department for Secretary. Excon. Reference: Seattle’s telegram 1¹ and Embtel 2670.² I saw Lloyd today and raised problem voyage controls. Also delivered memorandum containing substance and most text of first reftel.

He began by saying that his personal opinion Anglo-American relations in long run would be best furthered by lack of governmental powers to interfere in private shipping. In that case, incidents arising out of action by shipping companies would not become issue between governments. I pointed out that UK shipping controls enacted only in 1953 and had been preceded by very serious US public and congressional reaction against British ships carrying strategic goods to Communist China.

Lloyd said fundamental political decision had been made to dismantle post-war controls. Cabinet consciously decided in this process to eliminate voyage controls “regardless of consequences”. He also raised question whether the US concerned with shipping of all countries to Communist China or just UK shipping. In this connection, FonOff official (Cranston) said all other COCOM countries with Merchant fleets have some form voyage controls but have been impatiently awaiting UK lead in dismantling them. I said that we considered it especially important that UK and US have parallel policies. The US Government would be particularly concerned if the UK were to appear to be the leader in a movement that could be represented as making it easier for Communist China to obtain strategic items for use against US in the Taiwan Straits.

Lloyd referred to the action taken by the UK last year in eliminating the “China differential” which the US had reluctantly “accepted.” He said that he believed this action and our reaction to it had contributed greatly to improving the state of public opinion in the UK concerning US Far Eastern policy. He felt that otherwise it would have been impossible for the British Government to take the position they have concerning Quemoy and Matsu. He felt that action had been directly responsible for the British Government’s success in avoiding serious public reaction here to our present position in the Taiwan Straits.

Lloyd referred to the British understanding that the bloc has ample shipping for the supply of China and also the fact that, even under the present legislation, there was nothing to prevent their buying British ships for the China trade. But he recognized the psychological point made by US and felt that it would be most unfortunate if British shipping were used on any large scale for the supplying of strategic goods to Communist China. He would be prepared, if necessary, to make his position in this regard clear at appropriate time. Meanwhile, he wished that there were some way to prevent such misuse without requiring a reversal of the fundamental political decision that had already been made by the government.

In summing up the position, Lloyd emphasized that he was speaking for himself at this point. Other ministries more concerned with the earnings of shipping companies might feel differently. Therefore, he would have to check his own preliminary ideas with the Cabinet. In the meantime, his position was as follows: (1) HMG would use all its power of persuasion with shipping companies to prevent their carrying strategic goods to Communist China. On inquiry, he explained that he was talking about goods that would require licenses when shipped from the UK. He also pointed out that the UK Government’s power to persuade might not extend to shipping that is under British registry but really not controlled by British businessmen. (2) If there were serious abuse by shipping companies of the termination of formal controls, it would be much easier to obtain favorable action from Parliament on new legislation. Under those circumstances, such legislation would be seriously considered. (3) In the absence of such abuse, he considered it virtually impossible to obtain parliamentary approval of special legislation, at least before the general election.

I said I would report these views to Washington, and Lloyd said he would let me know the results of further discussions in the government.

Subsequently, the Embassy was assured by Cranston that the formal announcement would not be made in the COCOM without further discussions with US.³ He wanted to be sure it was understood by the Department, however, that the British action concerning voyage controls had already been mentioned informally to some COCOM delegations as well as the British intention of making a more formal announcement. He said that the Greek Delegation has been asking when the announcement may be expected.

Whitney

0. Source: Department of State, Central Files, 460.509/11–1758. Secret. Repeated to Paris Topol.
1. Document 338.
2. Dated November 14. (Department of State, Central Files, 460.509/11–1458)
3. On December 8, the British Ambassador in Washington informed the United States by a note that the British Government could not reverse its decision to discontinue voyage licensing and bunkering controls nor further delay notification to COCOM. The U.S. Delegation to COCOM was instructed to reply to the British statement that it regretted this step since it might be subject to “misinterpretation” of Western intentions to stand firm against “Chinese Communist aggression” in the Taiwan Straits. (Telegram 1965 to Paris Topol, December 9; ibid., 460.509/10–3058)