367. Memorandum From the Executive Secretary of the Department of State (Eliot) to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • French Proposal to Manufacture Integrated Circuits in Poland

In M. Alphand’s meeting with you on December 11 it is anticipated that he will raise the French proposal to transfer equipment and technology to Poland for the manufacture of integrated circuits. This proposal, which constitutes the second phase of a large Franco-Polish electronics project, was opposed by the United States in COCOM 2 on October 13.3 You will recall that M. Schumann raised with you the first phase of the project, i.e., silicon transistor technology, during your meeting with him in Paris in August 1969. Following bilateral discussions with the French in Washington later in the year, the United States approved that first phase while warning that the later stage would be more difficult.4

As reported in my memorandum to you dated October 27, 1970,5 we agreed to meet with French about their proposal and discussions were held in Washington on November 16 and 17 (see enclosed reporting telegram 189344 to Paris).6 The French placed special stress on the political and economic importance of the overall Franco-Polish venture (valued at $100 million), which they say will be placed in jeopardy if the integrated circuit portion is not approved. They emphasized also the current depressed state of the French electronics industry and noted the advantages to the West in helping Poland become less dependent on the Soviet Union in the important electronics field.

The main point at issue in the technical part of the discussions was the French assertion that the integrated circuits concerned are produced in France on a civilian production line and do not meet performance [Page 923]levels required for military applications. United States experts pointed out that in the United States, military and civilian integrated circuits are produced from the same process and materials. In this country testing determines which integrated circuits meet the higher military standards and which can be sold for less rigorous civilian applications.

At the conclusion of the talks, the French invited us to send experts to inspect a French integrated circuit production line to clarify the question of whether a valid distinction can be made between military and essentially civilian integrated circuits. We accepted and a United States team plans to visit the plant on December 9 and 10. Their findings together with further technical evaluation of the French proposal which is taking place here will assist in reaching a final decision on this case.

The Department went along with the desire of the other agencies concerned to object to the French proposal primarily because of the probable impact on COCOM strategic controls in the electronics sector. The French case cannot be judged in isolation since there are pending cases submitted by other COCOM members which will be virtually impossible to deny if the French case is approved. Moreover, it is clear that French assistance in this case could be expected to advance Polish production capabilities and it cannot be ruled out entirely that the Poles would in turn be able to provide some assistance to the Soviets.

On the other hand, the Polish plant will not be in full production until 1975 when the Soviets will probably have expanded their own production of integrated circuits to meet their needs and when the state-of-the-art in the Soviet Union will probably have advanced beyond that represented by this French technology. Moreover, there is strong and growing support among COCOM members for a relaxation of COCOM controls on semi-conductors and manufacturing technology. West European and Japanese firms, as well as our own electronic component firms, are looking increasingly to the Eastern European market, and some relaxation of COCOM controls in this sector is likely to take place over the next few years in any event. All COCOM members have expressed approval of the French proposal except the United States and the Netherlands, and the Dutch will undoubtedly be guided by the final United States position.

If this question is raised by M. Alphand, it is suggested that you tell him that we are following up on the French suggestion to visit their integrated circuit plant and that we hope to reach a final decision shortly.

Ted C 7
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files-Europe, Box 677, France, Volume VII 10/70-3/71. Confidential. This memorandum is Tab C to a December 10 memorandum from Sonnenfeldt to Kissinger transmitting briefing material for Kissinger’s meeting with Hervé Alphand on December 11.
  2. Coordinating Committee on Export Controls (includes NATO, except Iceland; and Japan). [Footnote in the source text.]
  3. See Document 366 and footnote 2 thereto.
  4. See Document 365.
  5. Not found.
  6. Not printed; telegram 189344 to Paris is dated November 19. Telegram 167672 to USOECD, October 12, is also attached; see also footnote 3, Document 366.
  7. Curran signed for Eliot above Eliot’s typed signature.