S/S–NSC
Files: Lot 63 D 351: NSC 91
Series
Note by the Executive Secretary of the National
Security Council (Lay) to the National Security Council
1
top secret
NSC 91
[Washington,] October 30, 1950.
East-West Trade
The enclosed proposed statement of policy on the subject, transmitted by
the Secretary of State, is submitted herewith for consideration by the
National Security Council, the Secretary of the Treasury, the Secretary
of Commerce, and the Economic Cooperation Administrator, at the next
regular Council meeting on Thursday, November 2, 1950.2 Also
enclosed for information is a staff study prepared in the Department of
State and upon which the foregoing statement of policy is based.
[Page 217]
In transmitting the enclosures, the Secretary of State stated that, in
view of the difficulties which have arisen in connection with the
implementation of the action taken by the National Security Council
following its review of Export Controls and Security Policy on August
24, 1950 (NSC Action No. 347),3 he
believes it would be helpful if the Council would again consider this
problem and clarify its recommendations. He hoped that this could be
given urgent attention and considered at the next Council meeting.
It is recommended that, if the enclosed statement of policy is adopted,
it be submitted to the President for consideration with the
recommendation that he approve it and direct its implementation by all
appropriate executive departments and agencies of the U.S. Government in
accordance with the procedures contained in paragraph 2 thereof.
[Enclosure 1]
Draft Policy Statement Prepared in the Department
of State
top secret
Washington, October 28,
1950.
Proposed Statement by the National Security
Council on Export Controls and Security Policy in Elaboration
of
NSC
Action No. 347
1. It is recommended that the following policy be adopted by the
NSC:
-
a.
- After conclusion of negotiations with the Consultative
Group countries on commodities on the United States 1A list
and after adequate notice to these countries, non-agreed 1A
items which the United States considers sufficiently
strategic to justify this action should be denied to those
countries unless assurance is obtained that identical items
will be totally denied to Soviet Bloc countries.
-
b.
- After conclusion of the negotiations on the items in the
United States 1B list and after adequate notification to the
Consultative Group countries, licenses for non-agreed 1B
items which the United States considers to be sufficiently
strategic should be similarly denied to those countries
unless assurances are obtained that shipments from those
countries to Soviet Bloc countries of the identical item
will not be increased.
-
c.
- When either a or b above becomes effective, consideration shall be
given to similar action with respect to specialized capital
equipment for the production of items covered by a and b
above.
-
d.
- The concept of “identical” should be understood to mean:
- (1)
- In the case of capital equipment, items which
carry out the same operation.
- (2)
- In the case of semi-finished or finished items,
items which serve the identical purpose.
-
e.
- Procedures should be worked out for applying a comparable
policy as soon as practicable to friendly countries not in
the Consultative Group.
If items are accepted by the Consultative Group countries for
inclusion in International Lists I or II, no assurances of the type
referred to in a and b
above will be required from these countries.
2. The following procedures should be followed in implementing this
policy:
-
a.
- When the Secretary of State determines that negotiations
on International List I have been concluded or that action
along these lines will not interfere with the successful
conclusion of those negotiations:
- (1)
- The Secretary of Commerce shall review United
States 1A items that have not been accepted for
either International List I or II to determine
whether they should remain on the United States 1A
list for embargo to Soviet Bloc countries.
- (2)
- Those 1A items which are retained on the United
States 1A list shall then be reviewed by the NSC, or a committee
appointed by it, to determine whether their
exportation from the Consultative Group countries to
the Soviet Bloc is of sufficient strategic
importance to justify denial of licenses for
shipment from the United States to the Consultative
Group countries.
- (3)
- In the case of items which are so determined, the
United States should notify the Consultative Group
countries that licenses will not be issued for such
items unless assurances are obtained from the
government of the importing country that all
shipments of identical items to the Soviet Bloc will
be denied and the item in question will not be
transshipped.
-
b.
- When the Secretary of State determines that negotiations
with respect to items in the United States 1B list have been
concluded or that the following action would not interfere
with the successful conclusion of such negotiations:
- (1)
- The Secretary of Commerce shall review those
United States 1B items which have not been accepted
for the International Lists I or II to determine
whether they should remain on the United States 1B
list.
- (2)
- The NSC, or a
committee appointed by it, shall review those items
which remain on the United States 1B list after that
review in order to determine whether their
quantitative control by the Consultative Group
countries is of sufficient security importance to
the United States to justify denial of licenses by
the United States to a Consultative Group
country.
- (3)
- The United States should notify the Consultative
Group countries that licenses will not be issued for
such items unless assurances have been given by the
government of the supporting country that shipments
of identical items to Soviet Bloc countries will not
be increased and that the item in question will not
be transshipped.
-
c.
- Until decisions are made as required by 2–a and –b
above, licensing policies in effect prior to August 24, 1950
will apply. Thus the Department of Commerce should
immediately approve license applications now being held
under Program Determination No. 381,4 in accordance with policies and
procedures in effect before that date.
-
d.
- In the case of non-Consultative Group countries of Western
Europe, the basic policy will be implemented as follows:
- (1)
-
Switzerland and Sweden
- The United States should propose to the
Consultative Group that the governments of
Switzerland and Sweden be informed that the
Consultative Group countries will no longer approve
licenses for the export of International List I
items to these governments unless assurances are
received that such items, or their International
List I end-products, will not be exported to the
Soviet Bloc. When it is determined that a favorable
degree of agreement by the Consultative Group
countries has been reached on International List II,
an approach should be made through the Consultative
Group to obtain cooperation from Sweden and
Switzerland on this list. When the procedures
outlined above in sections 2–a and –b are made
effective they should be applied to Switzerland and
Sweden by the United States. In the event that the
Consultative Group fails to agree to the action
proposed by the United States relating to
International List I, the United States should take
such action unilaterally.
- (2)
-
Other Countries
- The trade of other Western European countries with
the Soviet Union and its satellites will be examined
to determine whether any comparable action with
respect to United States exports to them may be
necessary or desirable.
-
e.
- The Secretary of State will transmit to the NSC a report of the tripartite
negotiations on export controls upon their conclusion in
London, and will also transmit a report of the negotiating
situation as a result of the Consultative Group meeting
which takes place in Paris on November 15.5
[Enclosure 2]
Staff Study Prepared in the Department of
State
top secret
[Washington,] October 28,
1950.
Implementation of
NSC
Action No. 347
problem
The problem is to determine a licensing policy for the treatment of
exports to Western Europe which will accomplish the intent of
[Page 220]
paragraph (c) of NSC
Action 347 without conflicting with the negotiation of an agreement
on parallel action with friendly governments as required by
paragraph (a) of NSC Action 347.
discussion
NSC Action 347 was issued on August
24 as a result of the NSC review of
Export Controls and Security Policy (NSC 696 and 69/17).
NSC Action (a) states that negotiations should be continued with Western
European countries for an agreement on export control policy. NSC Action (c)
states that exports from the United States of strategic items to a
Western European country should be denied when that country ships
identical items or equivalent amounts thereof to Eastern Europe. It
is not clear from the NSC statement
of Action (c) what should be included in the
concept of “strategic items” or what constitutes the shipment of an
“identical item” or an “equivalent amount thereof”.
The evident intent of Action (c) was to
prevent shipments from the United States to Western European
countries which would have the result of permitting the export to
the Soviet Bloc of strategic items which would not otherwise take
place. This is a legitimate use of our licensing procedure, and
involves simply action to assure ourselves against transshipment or
the equivalent of transshipment. However, to attempt to influence by
such action the policies of friendly countries, where shipment by
them is unrelated to their imports from the United States, would be
unjustified coercion. It would also represent an interpretation of
paragraph (c) which would be inconsistent
with paragraph (a). The intent of Action (a) was to continue the voluntary negotiation
of agreements on security export controls with the Western European
countries, particularly with the countries of the Consultative
Group. It is essential to avoid injecting an element of coercion
into these negotiations.
The effort by negotiation to bring about substantial parallel action
by Western European countries has been carried to ministerial
levels. It was discussed in the recent Foreign Ministers’ meeting in
New York.8 It was then
decided to continue discussions among the United States, United
Kingdom and France, in London. Those discussions are now in
progress. The agreement reached there will be submitted to the other
Consultative Group countries in Paris.
These negotiations would be affected by any action taken in
implementation of paragraph (c). The American
negotiators have already expressed serious concern at the probable
effect upon these talks of
[Page 221]
the action under paragraph (c) contemplated
by the Department of Commerce and contained in Advisory Committee on
Export Policy Program Determination No. 381 of September 18. This
Program Determination provides for the denial of 1A exports to
Western European countries unless assurances are received within
certain time limits to the effect that the countries in question are
not exporting the same items to the Soviet Bloc either in transit
trade or from local production. (It is understood that a Program
Determination to cover 1B items is planned.) These assurances would
be required not only with respect to 1A items rejected by the
Consultative Group but also with respect to items still under
negotiation and even those that have already been accepted for
quantitative controls, as opposed to embargo.
In view of the effect which the enforcement of this policy would have
upon the negotiations in London and Paris the Commerce Department
has agreed to postpone action under Program Determination No. 381
until the policy could be reviewed. In the meantime, it has agreed
to issue export licenses for essential articles where postponement
of licensing would cause difficulty in the present negotiations with
the British and French. Most licenses for Western Europe are,
however, being held without action by the Department of
Commerce.
It is the belief of the State Department that the intention of the
NSC was to obtain the adoption
by Western Europe of adequate security controls with a minimum
impairment of other defense objectives. A policy of coercion in the
negotiation of an agreement on security export controls with Western
European countries would not serve our interests for the following
reasons:
- 1.
- An effective program of multilateral export controls
depends upon voluntary agreement by the cooperating
countries. We cannot expect that an agreement imposed by
coercion would be enforced by those countries with the same
vigor as one adopted voluntarily, particularly in such
matters as transit trade control, which depends upon an
effective degree of voluntary cooperation from other
countries.
- 2.
- An agreement imposed by coercion would not enlist the
Consultative Group countries in supporting the United States
in an effective approach to such non-cooperating countries
as Sweden and Switzerland. The denial of export licenses in
order to influence the negotiations could affect the
willingness of NATO
countries to give us their wholehearted cooperation in the
many other fields of action essential to the development of
Western defense.
- 3.
- A program based primarily on unilateral denials of exports
from the United States would be [by]
itself not necessarily result in any diminution of strategic
exports from Western Europe. It would be limited in its
effectiveness to those strategic commodities which the
countries in question happen to be purchasing from the
United States. It would not of itself prevent shipment to
the Soviet Bloc of strategic items of indigenous manufacture
in Western Europe.
[Page 222]
The State Department’s proposals for meeting these problems are
outlined below under the heading of “Recommendation”.
The purposes of these policy proposals can be summarized as follows:
- (a)
- To permit conclusion of the best possible voluntary
agreement with Western European countries.
- (b)
- When such an agreement has been obtained, to use United
States licensing to friendly countries to assure that no
shipment by the United States will result in greater
availability to the Soviet Bloc of a strategic item.
The application of the policy in the case of a 1A item and capital
equipment capable of producing such an item would call for complete
embargo of such a 1A item by the friendly country. It may be
questioned why a less rigid rule is applied in the case of United
States 1B items, since the United States in practice is itself
embargoing almost all shipments of such items to the Soviet Bloc.
There are several reasons why a distinction must be made.
- (a)
- These items were adopted for our 1B list with the
understanding that moderate shipments to the Soviet Bloc would
not add substantially to Soviet war potential.
- (b)
- Most of these items have been proposed by the United States
for International List II, which calls for quantitative
controls, and agreement on their status has been reached in some
cases.
- (c)
- The inclusion of an item in this list was without regard to
the need that might exist for some shipments to the East, in the
interest of the economic strength of Western Europe.
It should also be borne in mind that the policy proposed is to be
more or less automatically applied. There will be cases where a
shipment by the United States of a 1B item might have the effect of
permitting a Western European country to maintain shipments of a similar item to the Soviet Bloc.
In this case, the provision that Western European shipments must not
be increased, is clearly inadequate. However, every effort will be
made in the negotiations to achieve a reduction in shipments of 1B
items. Furthermore, it would be within the power of the NSC Committee, proposed in the
following recommendation, to lay down more rigid requirements for
individual items, where this appears desirable.
recommendation
[Here follows the text of the draft policy statement prepared in the
Department of State, printed above.]
