346. Memorandum of Discussion at the 404th Meeting of the National Security Council0

[Here follows a paragraph listing the participants at the meeting.]

1. U.S. Economic Defense Policy (NSC 5704/3; NSC Action No. 1865;1 Memos for NSC from Executive Secretary, same subject, dated January 232 and April 63 and 27,4 1959; NSC Action No. 20425)

Mr. Gray said that a year ago the National Security Council had asked the Council on Foreign Economic Policy to review U.S. Economic Defense Policy (NSC 5704/3). Three months ago the NSC noted a report by the Council on Foreign Economic Policy that the policy should be continued pending CFEP study of its implementation. The CFEP study has now been completed and a further report from the CFEP is before the Council. The Joint Chiefs of Staff in their comments on the CFEP Report have re-affirmed their interest in effective trade controls against the Sino-Soviet Bloc.

Mr. Randall said that at the request of the NSC the CFEP had reviewed U.S. Economic Defense Policy and had arrived at the conclusion that it would submit no recommendation for changes in that policy at this time. There were, of course, differences of opinion among the agencies represented on the CFEP as to our policy on trade with the Soviet Bloc. Existing policy was based upon “the assumption that interference in the trade between the Free World and the Sino-Soviet Bloc should take place only where a clear advantage to the Free World would accrue from such interference,” (par. 1 of NSC 5704/3). A recent letter from the President to Khrushchev had stated that the U.S. favored the expansion of peaceful trade with the U.S.S.R.6 Questions had arisen as to the effect of this letter on existing economic [Page 771] defense policy. These questions had been reviewed by a CFEP committee which had submitted an exhaustive report to the CFEP.7 From this report the CFEP had concluded that the implementation of economic defense policy was satisfactory and that no changes in such policy were needed. This conclusion by the CFEP represented a middle course between the shades of opinion among the various agencies. In conclusion Mr. Randall noted that any department could propose a change in U.S. Economic Defense Policy and that if any change were proposed, the CFEP would again review the policy. Assistant Secretary of Commerce Mueller said he endorsed the comments made by Mr. Randall and had nothing to add. Mr. Gray remarked that the question of review of U.S. Economic Defense Policy would continue to come up annually.

The National Security Council:8

Noted the enclosures to the reference memorandum on the subject dated April 6, 1959, and the views of the Joint Chiefs of Staff thereon, transmitted by the reference memorandum of April 27, 1959.

[Here follow agenda items 2–5.]

Marion W. Boggs
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Drafted by Boggs on April 30.
  2. See footnote 9, Document 327.
  3. See footnote 4, Document 343.
  4. In this memorandum, Lay transmitted to the NSC a memorandum from Randall to him, April 3, summarizing the consensus of the April 2 meeting of CFEP. Also attached to Lay’s memorandum were the minutes of the April 2 CFEP meeting. (Department of State, S/PNSC Files: 62 D 1, U.S. Economic Defense Policy)
  5. In this memorandum, Lay transmitted the views of the Joint Chiefs of Staff to the Secretary of Defense as expressed in a memorandum of April 21 which reiterated the consistent and continuing belief of the Joint Chiefs of “the need for the preservation of effective trade controls against the Sino-Soviet Bloc.” (Ibid.)
  6. See footnote 6, Document 343.
  7. See footnote 2, Document 345.
  8. A summary of the report is printed as an enclosure to Document 344.
  9. The following paragraph constitutes NSC Action No. 2071, approved by the President on May 4. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)