Foreign Relations of the United States, 1969–1976, Volume XXIX, Eastern Europe; Eastern Mediterranean, 1969–1972

4. Airgram From the Office of the Permanent Representative to the North Atlantic Treaty Organization to the Department of State¹

Brussels, May 12, 1969.

SUBJECT

• Statement on US Trade Policy toward Eastern Europe and the USSR read in NATO Committee of Economic Advisers

REF

• State CA–1888, March 26;² USNATO 1804;³ State 62758⁴

A–119

There is attached a copy of the statement on US policy on trade with Eastern Europe and the Soviet Union which was read at a meeting of the NATO Committee of Economic Advisers on May 8, 1969. This statement is based on the text of the Departmentʼs CA–1888 with editing provided by USNATO and the Department in the reference telegrams cited above. For distribution within NATO channels it is classified as NATO Confidential.

Cleveland

Enclosure⁵

U.S. TRADE POL ICY TOWARD EASTERN EUROPE AND THE USSR

At present US export controls for trade with Communist countries are more extensive than those imposed by many of our partners in NATO, as well as those established in COCOM. Furthermore, certain US legislation such as that prohibiting Export-Import Bank financing of trade with Eastern Europe⁶ and that denying most-favored-nation tariff treatment to all East European countries except Yugoslavia and Poland,⁷ in addition to restraints applied by the East-European countries themselves, make substantial expansion of US trade with Eastern Europe and the USSR unlikely. To reflect US concern at the role of certain Warsaw Pact countries in last yearʼs invasion of Czechoslovakia, the US adopted certain measures to intensify its already highly restrictive policy regarding trade with these countries; however, in the absence of significant parallel restraints on trade and credit policy by other NATO members, these further restrictive measures have had little additional impact. Largely for that reason, their continuance did not appear to be indicated.

Against this background, the US Government believes that existing US trade control procedures are adequate to cover US political or strategic interests respecting East-West trade. Important new business is therefore no longer being discouraged. Export license applications are being processed in accordance with established procedures. Proposed export transactions for which licenses are sought are considered on their individual merits and licensed or denied according to their implications for the national security and welfare. In assessing these implications, the Department of Commerce, in conjunction with Departments of State and Defense and other interested agencies, takes into account prevailing security and foreign policy considerations as well as the governmentʼs long range trade policy.

Businessmen who wish to trade with the Soviet Union and the other countries of Eastern Europe are being told that it is consistent with US policy to carry on such trade so long as it is conducted in accordance with applicable rules and regulations, but are cautioned that individual transactions are subjected to the consideration alluded to above. This policy is based on the view that trade can have a positive impact on Eastern European societies. It can also improve somewhat the climate of relations between Eastern European countries and the US, can help reduce their economic dependence on the USSR, and in turn lessen the economic integration of the Communist countries. In the case of the USSR, trade is one of the means available to us for the development of some useful non-official relations with that country.

To the extent that Czechoslovakia is able to maintain some independence and continue to seek to expand its trade with the US, we believe we should respond as fully as possible. With respect to Romania, its continuing independent foreign policy, including its non-involvement in the Czechoslovak invasion and its strong condemnation of this Warsaw Pact action, warrant continued special treatment in trade matters where strategic considerations are not overriding.

This statement does not apply to US trade with Yugoslavia which, though a Communist country, is not a member of the Warsaw Pact and is treated as a West European country by the US Government for export control purposes.

In view of the continuing uncertainty of the situation in Eastern Europe, the US hopes that its other allies concur in the need to keep their own trade policies under continuing examination with a view to taking appropriate prompt action in the event of any further aggression by Warsaw Pact members.

1. Source: National Archives, RG 59, Central Files 1967–69, FT 1 EUR E–US. Confidential. Drafted by Smith (E); cleared by Luzzatto and van Heuven; and approved by William Cargo. Repeated to Ankara, Athens, Belgrade, Berlin, Bonn, Brussels, Bucharest, Budapest, Copenhagen, The Hague, Lisbon, London, Luxembourg, Oslo, Moscow, Ottawa, Paris, Prague, Reykjavik, Rome, Sofia and Warsaw.
2. Document 2.
3. Telegram 1804 from USNATO, April 18, reads in part: “During the approximately eight months since Soviet troops entered Prague, we have made maximum effort…to measure the extent of allied economic response through some slowdown or interruption of trade and credits to the Warsaw Five group. We have noted only a very few slight interruptions, even when Western public reaction to Soviet intervention was strongest. And now…in the spring of 1969 we find that the situation is almost completely back to normal. The few restrictions which may have been imposed are removed and Western countries are not curtailing their trade, nor are their pre-invasion policies on extension of credits in any way altered.” The telegram also included a draft of airgram A–119. (National Archives, RG 59, Central Files 1967–69, FT 1 EUR E–US)
4. Telegram 62758 to Brussels, April 23, suggested revisions to the draft statement provided in telegram 1804 from USNATO. (Ibid.)
5. Dated May 7, 1969; Confidential. A handwritten notation reads: “Brussels 5–12–69.”
6. The Fino Amendment of 1968 to the Export-Import Bank Act (P.L. 90–267, 82 Stat. 47) prohibited Export-Import Bank financing of trade with all Communist countries except Yugoslavia.
7. Section 231 of the Trade Expansion Act of 1962 (P.L. 87–794, 76 Stat. 872) denied MFN status to all Communist countries except Poland and Yugoslavia.