Foreign Relations of the United States, 1948, Germany and Austria, Volume II

740.00119 Control (Germany)/12–348: Telegram

The Acting Secretary of State to the Embassy in the United Kingdom

secret
us urgent

Washington, December 3, 1948—2 p. m.

4514. ToRuhr 16. Subject definition steel (Ruhrto 14 and OMGUS CC 6833¹). 1. Dept feels US should stick to strict technical definition of steel as comprehending all steel including crude, semi-finished and finished but excluding all iron including pig iron, cast iron and ferroalloys. This is clear and defensible definition and accords with para 12–e your instructions² developed after considerable discussion. OMGUS was informed this position in Warx 91587, Oct 27.³

2. Since all other delegates wish inclusion pig iron as well as crude and semi-finished steel, you should propose as compromise definition as per your instructions. Shld be made clear that inclusion any given items involves no commitment re volume exports such items from Germany. You shld draw attention to point already made by UK (Ruhrto 14 para 11) that amounts of steel available for export under present limitation will not be substantial.

3. For ur info Army proposed additional statement be made that exports will necessarily be in form of fabricated steel products in view US financial interest in size of German deficit. Dept informed Army it feels it is not necessary make this additional point in view acceptance by all concerned of MilGov veto during Control Period and that to raise it might be needlessly irritating and might give impression we were trying at this to lay foundation for an eventual increase in permitted level of steel production.

4. Re para 4 Ruhrto 14. Protection during Control Period against dangers excessive exports any products within purview IAR amply provided through JEIA veto. After Control Period we must rely on combined US, UK and German votes in IAR. Excessive exports coal or coke, for example, could be as damaging to future German economy as excessive exports ingots. This, however, is risk we undertook in entering into London Agreement and don’t feel it can be used to justify exclusion of particular types steel from definition.

5. Re scrap you should remind delegates existence US–UK agreement which provides for MilGovs to determine scrap exports from Bizonia⁴ and US view that status this agreement similar to Moscow sliding scale.⁵ Would therefore be no function for IAR to perform this field since, unlike coal, qualitative differences scrap not of great significance.

6. At this stage Dept does not regard UK compromise as acceptable. Main effect as compared to Washington definition is to allow allocation pig iron and ferro-alloys, but to interpose additional step in process. Countries desiring allocation these products could use their votes to decide such allocation necessary to prevent frustrating objectives of agreement. Dept recognizes possibility, however, that as negotiations proceed US may wish to reconsider position in context settlement other outstanding issues.

Lovett

1. Neither printed.
2. The reference here is to instruction 459, November 10, to London, p. 465.
3. Ante, p. 461.
4. Reference is to the U.S.–U.K. Agreement of September 30, 1948 for the Allocation of Iron and Steel Scrap from Germany.
5. Regarding the Moscow Sliding Scale Agreement of April 1947, see footnote 3 to Department of the Army message Warx 92764, November 17, to Berlin, p. 503.