611.9331/12–249

Memorandum of Conversation, by Mr. Stephen C. Brown of the Office of Chinese Affairs

Participants: Armco Steel Co.-Mr. McCabe
Mr. Edwards
Mr. McKnight
CA–Mr. Freeman
Mr. Brown

The Armco representatives on November 30 came in by previous appointment at their request to inquire about the Department’s attitude towards trade with China.44 They explained that they were receiving cable inquiries and orders from their representatives in Communist-held territory, and were wondering whether they should go into this business seriously or whether they should tell their correspondents to save their cable tolls and submit inquiries by mail as [Page 972] and when possible; also whether there was likelihood that such trade would be permitted.

They were informed that so long as they complied with all the requirements of current export regulations they would be subject to no criticism. It was not possible to go much beyond this, or to discuss particular commodities, since no government agency could or would give them assurances in advance that an export license for a given commodity would be granted if required and applied for. Similarly, it was not possible to say anything about the possibility of future changes in export regulations; all that could be said was that if they complied with current regulations at the time of shipment they would be in the clear.

They said they were of course aware of this, but hoped that we would be able to give them some general indication of the Department’s attitude towards the trade in general. They understood that there were interdepartmental committees concerned with the subject and indidicated that they were under the impression that the Department’s attitude and policy were determining, in a general sense.

Mr. Brown said that there were of course interdepartmental consultations on the subject, and that the Department was represented, but that the Department’s views were not necessarily determining. In a general way it might be said that one of our primary concerns with trade with China was the possibilty that goods now denied to Russia and the satellites in direct channels might filter through to them via China. One of the main reasons for the recent Commerce changes in the export control system was understood to be this possibility of transshipment. Mr. Freeman added that of course we were also concerned about the possibility of the Chinese Communists acquiring goods for direct military uses and purposes in China.

They asked whether it might be inferred that there was no objection to trade in commodities serving China’s normal civilian economy. Mr. Freeman said that for their confidential information this was essentially the case, and that within reason we did not object to the export to China of goods of an essentially civilian character for the civilian economy of China. We had no desire to restrict or hamper the normal economy of the Chinese people.45

As they left, Mr. Brown said that of course we were interested in any inquiries of an abnormal or unusual character which might come to them, and asked that we be kept informed of any such if they felt free [Page 973] to communicate them to us. They said they could perceive no objection to this, and suggested that they might also send us for our confidential information copies of letters from their correspondents regarding conditions in Communist China.

  1. A number of similar conversations during 1949 with representatives of business concerns interested in trade with mainland China are recorded in the Department files. This memorandum is printed as typical in showing the Department’s attitude on trade with Communist-occupied China.
  2. In despatch No. 209, March 20, 1950, the U.S. Mission at the United Nations reported that, in a letter received by the UN Secretariat on March 6, the Chinese Permanent Representative at the UN (Tsiang) gave notice of the decision of his Government to withdraw from GATT, the withdrawal to take effect May 5, 1950 (394.31/3–2050).