173. Memorandum From James C. Thomson, Jr., of the National Security Council Staff to the President’s Special Assistant (Rostow)1
SUBJECT
- Relaxation of U.S. Embargo on Trade with Communist China
I want you to know of a China initiative which has been under preparation for some months and will soon be on its way to the Secretary of State for decision. I attach an advance (and thoroughly unofficial) draft of the relevant State document.2 (This comes to me because I am quoted in the annexes, as a discussion participant.)
In brief, this memorandum recommends that Rusk authorize the Department to being certain small modifications of our total embargo on trade and transactions with Communist China which has been in effect since 1950. Specifically, Rusk is asked to approve (a) general licensing of relevant transactions for those categories of U.S. citizens now entitled to travel to [Page 365] Communist China, (b) an end to the special bunkering controls that have been in effect for 16 years, and (c) preparation for unilateral relaxation of trade controls (subject to the President’s approval) with initial focus on two-way trade in foodstuffs, non-war related pharmaceuticals, and art objects.
This recommendation to the Secretary results from the first inter-agency review of the complete China trade picture since the outbreak of the Korean War. To the casual observer, it may seem that the mountain has labored and brought forth a mouse. Yet I anticipate resistance at the top of the Department even to these minimal steps.
The rationale for modification of our trade embargo is familiar to you: In the short run, despite anticipated Chinese Communist denunciation of such moves, we alter a substantive element of our previously rigid and defensive posture toward China, and we demonstrate to our critical friends and allies a welcome degree of confidence and flexibility. In so doing, we give substance and meaning to the Administration’s new rhetoric—“firmness and flexibility,” “containment without isolation,” “reconciliation,” etc. Equally important, for the longer run, we communicate a new and supportive message to elements within mainland China that are pushing for policies of pragmatism and accommodation with the outside world.
I bring this matter to your attention for obvious reasons. In his July 12th speech on Asia, the President went far in words toward changing our China posture at the highest level. The response has been extraordinarily good, both in terms of the approval his words have won, at home and abroad, and in terms of the absence of strong criticism (even from Taiwan). If we are to keep up the momentum of the past six months, we must begin to match out words with action. There is no better place to start than the subject of trade regulations which have outlived their original rationale and usefulness.
As you know, however, there is certain built-in resistance to any such adjustments on the 7th floor at State. We therefore face a situation in which the President’s declared hopes—“the free flow of ideas, people, and goods”—may well be obstructed, despite hearty support for those hopes within the working bureaucracy—unless the White House can deftly intervene.
I realize that there are a large number of complex political ramifications to this issue—among them, the Vietnam War, the elections, the idiotic furor over the German rolling mill, etc. But I would argue that as long as we are standing firm in Vietnam, the President has far more benefit than risk to reap in maintaining momentum on China actions as well as China rhetoric. I would add that such actions could not take place at a more important moment in Chinese political history: the more we can do to support the mainland pragmatists by our actions and to cause confusion to the [Page 366] theologians in Peking, the better for our national interests and the achievement of stability and peace in Asia.
- Source: Johnson Library, National Security File, Country File, China, Vol. VII. Secret; Eyes Only. Filed with a covering note of August 4 from Thomson to Rostow that indicates that William J. Jorden of the NSC staff had read Thomson’s memorandum and concurred.↩
- A draft memorandum from Bundy and Solomon to Rusk is attached but not printed.↩