Foreign Relations of the United States, 1951, Korea and China, Volume VII, Part 2

493.119/11–2151

Department of State Position Paper¹

secret
SD/A/C.1/376/Rev.1

[Washington,] October 30, 1951.

Additional Economic Measures Against Communist China and North Korea

the problem

To determine the United States position in the Sixth General Assembly regarding additional economic measures against Communist China and North Korea.

recommendations

In general, the Delegation should seek to obtain broad agreement to the application of economic measures which will have a maximum adverse effect upon the war potential of Communist China and North Korea, so long as their aggression continues.

A. If an armistice in Korea materializes:

1. The United States Delegation should take the position that the existing embargo should be continued in full force for the time being, pending clarification of the Korean situation. The embargo should not be relaxed during the Sixth Session of the General Assembly in Paris.

2. If heavy pressure for the suspension or abrogation of the embargo develops, the Delegation should consult the Department.

B. If an ambiguous situation respecting the possibility of an armistice in Korea continues:

1. The United States Delegation should seek to induce friendly delegations to support Additional Measures Committee and General Assembly resolutions designed to enhance the effectiveness of the existing United Nations embargo on certain strategic materials, through such measures as cargo and selective shipping controls. This could be done without altering the basic points in the General Assembly resolution of May 18 which includes the list of embargoed items and envisages that each state should apply the recommended measures individually. A new resolution might include the prohibition of carriage of embargoed goods from any point to Communist China or North Korea, prohibitions and safeguards against transshipment and re-export restrictions on the sale or chartering of vessels and aircraft, denial of bunkering and port facilities, and denial of insurance facilities (see Annex 3).

2. The United States Delegation should also stress the need for effective action on the part of every State to prevent by all means within its jurisdiction, the circumvention of controls applied by other states to further the objectives of the resolution of May 18, 1951.

3. If exploratory conversations indicate that adequate support could be obtained for more extensive measures, the Department should be so informed.

C. If the armistice negotiations definitely break down or if full scale hostilities are resumed:

1. Until otherwise instructed, the Delegation should avoid indicating to other delegations the precise nature of the recommendations which the United States contemplates making in these circumstances, but should indicate merely that still further economic measures would be taken to meet the aggression.

2. For the information of the Delegation, it is contemplated that in these circumstances the Delegation would be directed to induce friendly delegations to support Additional Measures Committee and General Assembly resolutions calling for a total trade embargo supported by ancillary measures, approximating the United States’ present controls.

3. If it is impossible to obtain broad support for such a trade embargo, particularly from the principal free world trading nations and the principal free world maritime nations, the Delegation should consult the Department regarding the advisability of pressing vigorously for less far-reaching measures, or of standing firm for the maximum program.

discussion

Background

In consequence of the Chinese Communist intervention in the Korea conflict late in 1950, the General Assembly on February 1, 1951, adopted a resolution for which the United States had pressed which, among other things, requested “a Committee composed of the members of the Collective Measures Committee as a matter of urgency to consider additional measures to be employed to meet this aggression and to report thereon to the General Assembly … The new Committee, consisting of twelve of the fourteen members of the Collective Measures Committee, became known in due course as the Additional Measures Committee.

The United States took the lead in persuading the Additional Measures Committee to recommend action. The United States Government’s general position was that “the United States Government, in view of the Chinese Communist aggression in Korea, should press for the application of such international control measures as will be effective in diminishing the Chinese Communist potential for military aggression and as will carry the maximum weight of moral condemnation. Its efforts through the United Nations and other channels should be directed to seeking, on a cooperative basis, the application by the maximum number of friendly countries of such controls for this purpose as the United States considers would be in the common interest in fostering collective security.”^* In accordance with this policy, the United States Government was instrumental in having the Additional Measures Committee make certain specific recommendations to the General Assembly.

On May 18, 1951, the General Assembly adopted a resolution recommending that every state (not United Nations Members only) “apply an embargo on the shipment to areas under the control of the Central People’s Government of the People’s Republic of China and of the North Korean authorities of arms, ammunition and implements of war, atomic energy materials, petroleum, transportation materials of strategic value, and items useful in the production of arms, ammunition and implements of war.” The resolution also called on every state to determine which commodities exported from its territory fell within the embargo and to apply controls to give effect to the embargo, to prevent by all means within its jurisdiction the circumvention of controls on shipments applied by other states pursuant to the resolution, and to cooperate with other states in carrying out the purposes of the embargo. The complete text of the resolution is attached as Annex 1.

The controls recommended by the resolution fell far short of the United States’ own controls against Communist China and North Korea, which in their present form had been in effect since December 1950, when massive Chinese Communist intervention became apparent.

The resolution was communicated by the United Nations to 83 states or regimes—60 United Nations Members and 23 non-Members. They were requested in a provision of the resolution to report to the Additional Measures Committee within thirty days on the measures taken in accordance with the resolution. To date, 43 states (37 Members and 6 non-Members), including the United States, have made generally satisfactory replies. Four states (3 Members and 1 non-Member) have made replies which may be considered inadequate or evasive. Eight states (5 Members and 3 non-Members)—all of them Soviet bloc members—rejected the resolution. Twenty-eight states or regimes (15 Members and 13 non-Members) have not replied, although six of these (3 Members and 3 non-Members) have acknowledged the receipt of the circular. See Annex 2 for a list of the states in each category. The 43 states accepting the recommendations of the resolution, however, include all of our important allies as well as the main non-Soviet-bloc potential suppliers of strategic items to Communist China and North Korea. The extent of acceptance of the letter of the resolution, therefore, may be considered satisfactory. In general, it may be said that the embargo has had an appreciable economic and psychological impact upon the aggressors.

In an effort to enhance the effectiveness of the embargo, the Department on June 11, 1951, instructed^† its representatives at all of the free world capitals to inform the governments to which they were accredited of the scope of the reply which the United States was about to make to the Additional Measures Committee pursuant to the resolution, to suggest that the United States Positive List might prove a useful guide to them, and to express the hope that they would apply adequate shipping controls.

It should be noted that, although the United States has not sought United Nations action to strengthen or expand the United Nations embargo, since last June the United States has made approaches to a number of countries to induce them, if possible, to accept and apply fully the provisions of the May 18 resolution (e.g., Indonesia, Ceylon) or to institute shipping or other ancillary controls as being in the spirit of the May 18 resolution (e.g., United Kingdom, Panama, Liberia, Greece). These efforts have met with varying degrees of success.

June 18, 1951, was the deadline for replies from states to the Additional Measures Committee regarding action taken under the May 18 resolution. On June 23, before the nature of the collective response could be carefully appraised and before the need for ancillary measures could be assessed, Malik made the speech which led to the armistice negotiations in Korea. It was reasonable, therefore, not to advocate any further United Nations action to tighten up the embargo pending the outcome of the armistice negotiations; any move to do so might have destroyed the prospects for a cease-fire. Indeed, in the atmosphere which prevailed during the summer, it was clear that the British, French, and others would not have agreed to any such further steps.

A. If an armistice in Korea materializes.

It is in the interest of the United States to maintain the embargo against Communist China as long as possible. Even if there is an armistice in Korea, therefore, we would not wish to relax trade restrictions against Communist China so long as its troops remain in hostile and threatening posture.

The United States Delegation should take the position that pending further clarification of the situation in Korea, there should be no relaxation of the embargo. Certainly the situation in Korea will remain uncertain for the duration of the Sixth Session of the Assembly in Paris and there should be no relaxation of the embargo at this session. The Delegation should point out that:

a. So long as the Chinese Communists maintain their forces in Korea they may still be considered technically aggressors even if an armistice is achieved;

b. Even if there is an armistice United Nations forces may have to stay in Korea because of the ever-present threat that the Communists might renew the fighting; the members of the United Nations therefore should do nothing to strengthen the hands of the Chinese Communists to enable them to renew hostilities;

c. Events in the near future, and particularly the implementation of the armistice agreement and discussions concerning possible political settlement in Korea, will give a clearer indication of the intentions of the Communists.

We should also make clear that quite apart from the United Nations embargo and the threat of further aggression in Korea, the United States is strongly of the opinion that the Nations of the free world should not supply Communist China with the means for waging aggressive war. Whatever be the status of the United Nations embargo, the United States and other free countries may, and should, maintain or institute unilateral or multilateral controls (e.g. COCOM) against Communist China and against the entire Soviet bloc.

The views of our principal allies, however, are quite different. If an armistice is negotiated, the British, French and others may be expected promptly to urge the immediate suspension or revocation of the embargo, perhaps without waiting even to determine whether the Communists are faithfully abiding by the armistice terms and are negotiating in good faith to achieve a political settlement. They will point out that the United Nations embargo was imposed as an additional measure in support of our fighting forces to help them meet the aggression in Korea. When the fighting stops the purpose of the embargo will, in their view, have been accomplished. The United States Delegation should resist such pressure if it is applied by other delegations. The Delegation should stress that, for the reasons indicated above, hasty action to suspend or abrogate the embargo would be most ill-advised and that this Government feels strongly that no such action should be taken for the time being—certainly not during the time that the Sixth Session of the General Assembly will be sitting in Paris.

Among other arguments, the Delegation may wish to point out that obvious avoidance of haste in suspending the embargo would be an elementary precaution against the possible use of an armistice by the Communists as a ruse de guerre.

The Delegation may also wish to point out to the French Delegation, either to combat possible pressure from the French for the premature elimination of the embargo or in an attempt to persuade the French to advocate our view in discussions with the British and others, that so long as the Chinese Communists continue to menace the Indo-Chinese states it would be to the French interest for the United Nations embargo to continue to limit supplies contributing to the Chinese Communist war potential—granting that the existing embargo could not reasonably be continued after the aggression in Korea has ended.

If, despite the Delegation’s arguments, heavy pressure to lift the embargo during the Sixth Session in Paris develops, the Delegation should consult the Department. For the Delegation’s information, it is recognized that it may become necessary to compromise with the British, French and others as to the timing and mode of removal of the embargo if the alternative is a sharp split with our allies. If a compromise becomes unavoidable, this Government would undoubtedly feel strongly that the embargo should be suspended rather than abolished in order to maintain the threat of reimposition if hostilities are renewed and because it would be politically easier to reimpose a suspended embargo than to recreate an abrogated one.

The embargo should not be allowed to peter out through a series of defections, but should be suspended or abrogated, as the case may be, by the General Assembly, acting on the advice of the Additional Measures Committee in accordance with operative paragraph 2 (a) of the resolution of May 18, 1951. A petering out of the embargo without United Nations action would seriously undermine the prestige of the United Nations.

B. If an ambiguous situation respecting the possibility of an armistice in Korea continues.

In these circumstances, the United States Delegation at the outset of the Sixth Session should begin privately to enlist support among other delegations for the adoption of ancillary measures to make the present embargo more effective. The justification for taking no action which might jeopardize the chances of peace, however valid last summer, is becoming weaker daily as the armistice negotiations drag on.

The weaknesses of the present embargo are due partly to the omission of certain ancillary controls from the May 18 resolution: and partly to the noncooperation of certain states—particularly those of the Soviet bloc. In other words, certain states (e.g., the United Kingdom) accepted the strict letter of the resolution and have been complying with its terms, so far as those terms go. On the other hand, certain other states (e.g., the Soviet Union and its satellites) never accepted the May 18 resolution and are seeking to frustrate its purpose.

With respect to the first category, for example, various cooperating countries having important merchant marines (such as the United Kingdom) are free to permit, and do permit, vessels of their flag to carry embargoed goods from non-cooperating countries to Communist China or North Korea. The resolution did not explicity proscribe the transshipment or re-export of strategic goods to Communist China and North Korea. The resolution made no provision against the supplying of bunkers to vessels carrying strategic goods to Communist China or North Korea; this has proved to be a matter of concern in connection with Polish and other vessels seeking bunkers on their way to Communist China with strategic materials. Any country is free to allow companies or persons subject to its jurisdiction to insure or reinsure vessels or cargoes involved in strategic trade with Communist China or North Korea; the availability of British insurance facilities is particularly helpful to this trade. For the types of measures which might be urged in this contingency, see Annex 3.

The second category consists of states which have not accepted the resolution and are not cooperating in the embargo. The non-Soviet bloc states in this category (e.g., Portugal, Ceylon) may yet, perhaps, be persuaded to cooperate and should again be urged to do so. Obviously, however, the European Soviet bloc itself represents the most serious gap in the embargo. Not only do the European Soviet bloc countries supply Communist China and North Korea from their own production, but they are in a position to transship or reexport to Communist China and North Korea imports of strategic items from the free world. Furthermore, they are in a position to supply important services, such as shipping, to help defeat the purpose of the embargo. As a practical matter, there is no way to compel Soviet bloc cooperation and very few economic measures to hamper Soviet bloc economic assistance to Communist China and North Korea lie at hand. It is possible, however, for all free world countries to deny bunkering, port, and insurance facilities to Soviet bloc (and any other) vessels carrying strategic goods to Communist China and North Korea.

The effectiveness of the UN embargo could be immeasurably increased if sanctions identical to those applied or proposed for application against Communist China and North Korea were also applied against non-cooperating States. Realistically, however, on the basis of considerable recent experience the US must recognize that there will be little or no support for extending the embargo and ancillary controls to operate against the Soviet bloc in Europe and against other non-cooperating states. Annex 3 has been drawn accordingly.

The United States Delegation, in its conversations with other delegations, should stress the point that these ancillary measures do not represent an irresponsible, bellicose broadening of the United Nations selective embargo, but rather that they are necessary to enable the existing embargo to attain the clear objective of the May 18 resolution—the denial of stipulated categories of goods to the United Nations’ enemies so long as the aggression continues. The United States Delegation should not seek the addition of new categories of goods to the United Nations embargo. If, however, contrary to expectation, other delegations indicate in exploratory conversations that they would be prepared to support additional categories, or ancillary measures beyond those suggested here, the United States Delegation should propose more extensive measures. This possibility does not preclude bilateral or multilateral discussions outside the UN forum of economic controls related to the UN embargo.

It is not believed desirable without a definite breakdown of armistice negotiations or without the resumption of full scale hostilities in Korea to endeavor to enlist support for a total United Nations embargo. The likelihood of the acceptance of a total embargo by major friendly nations in these circumstances is so remote as to make any effort to gain widespread support for it unrealistic. The degree of United States pressure that would be required and the amount of ill-will that would be engendered in a serious effort to bring about sufficient free-world acquiescence would involve the risk of a split in the free world and would overbalance the advantages of a total United Nations embargo at this time.

In connection with recommendation B.–2 the United States has in mind, for example, the possibility that Panamanian shipping controls, which constitute an outright prohibition of the transit of Panamanian flag vessels to Communist China and North Korean ports, will be rendered ineffective by the transfer of registry of vessels now under the flag of Panama to the registry of other nations which apply a selective and less rigorous embargo. We also have in mind the fact that the failure of other nations to cooperate in support of the Panamanian action would not only render the Panamanian decree ineffective, but would also cause considerable financial loss to the Government of Panama as a result of its effort to take effective measures in line with the May 18 resolution. The sweeping Panamanian controls, which admittedly go beyond the recommendations of the May 18 resolution but which are consistent with those of the United States, were adopted by Panama as they offered the only possibility of being effective, since the Panamanian flag vessels are almost exclusively owned by other than Panamanian interests, and since they rarely—if ever—come within the jurisdiction of the Government of Panama. Accordingly, states should be urged to support Panama’s action by declining, to register under their flags any Panamanian vessel which seeks to transfer its registry after it has been cancelled by Panama because of violation of Panamanian controls; while under threat of cancellation for intent to violate Panamanian controls; or when such transfer is apparently sought as a means of evading those controls. The same principle should apply to the vessels of other cooperating countries.

The broad principle of cooperation set forth in Recommendation B.–2 is not, of course, confined to the re-registering of vessels. It applies generally to a variety of controls applied by states to further the objectives of the May 18 resolution, even where any particular national control measure goes further than the action taken by others in that particular respect.

As to United Nations procedure if the United States Delegation in conversations with friendly delegations is able to lay the groundwork for favorable United Nations action, it is contemplated that the Additional Measures Committee would meet at Paris during the Sixth General Assembly and would report to the Sixth General Assembly in accordance with operative paragraph 2 (a) of the General Assembly resolution of May 18, 1951, transmitting an Additional Measures Committee resolution which among other things would recommend that every state (not United Nations Members only) take action specified therein. The General Assembly would refer the Additional Measures Committee’s report (and resolution) to the First Committee, after which the usual procedure would be followed.

The British have raised the question whether the Additional Measures Committee will continue to exist after the Fifth Session of the General Assembly ends. The argument has been put forward informally that the Additional Measures Committee as a committee rather than a commission ceases to exist at the end of the General Assembly session in which it was created. The United States position is that as no time limit was set when the Additional Measures Committee was created it continues indefinitely, until it is abolished by the General Assembly (which should not be done until the aggression in Korea has ended).

It is possible that the British, French, and others will be willing to adopt some or all of these ancillary controls by individual, unpublicized action but not in the United Nations. In this event, the United States might do well to agree to private extra-United Nations discussions leading to the unpublicized adoption of ancillary controls by the principal non-Soviet states and by the main maritime states. This method is less desirable than United Nations action, since economic controls secretly adopted and applied do nothing to mobilize free world psychological forces, and there is no effective defense against public criticism for not taking action which has in fact been taken. The US Delegation should not suggest taking the unpublicized course of action and should leave agreement on it to be reached elsewhere if circumstances lead to its consideration.

C. If the armistice negotiations are definitely broken off or if full scale hostilities are resumed.

It should be noted that this provides for what are, in a sense, two separate contingencies. It is possible that neither side will accept the onus of breaking off negotiations. For this reason, it is necessary to provide for the possible resumption of full scale hostilities without the breaking off of armistice negotiations. Recommendation C is applicable if either the Communists or the United Nations forces launch a general offensive.

The United States has long since applied the measures which the United Nations should be asked to adopt in these circumstances. The United States action has not had the effect of spreading the conflict, and there is no good reason to suppose that similar economic measures adopted by others would have that undesired effect.

Recommendation C calls for a total United Nations embargo and for a complete range of ancillary measures. The difference between Recommendations B and C is that C calls for a total embargo whereas B calls only for the continuance of the present highly selective embargo. Under both B and C, the United States should seek the fullest possible list of ancillary measures (shipping controls, etc.) except that assets controls are omitted from B as being too much to ask of the British, French, and others under B conditions in Korea.

Under “C” conditions in Korea (the determination of which would be made in Washington), the United States Government will need to determine (a) whether, in the light of self-interest, any exceptions should be recommended by the Additional Measures Committee in order to permit the importation by the United States and its allies of critical items from Communist China, or for any other specific reason, and (b) what measures should be recommended by the Additional Measures Committee in order to maximize the effectiveness of the total or near-total embargo. This paper does not contain such determinations as they will need to be made in the light of all the circumstances prevailing at the time “C” conditions are deemed to have commenced. The report of the Collective Measures Committee provides a useful guide in this connection.

A United Nations total embargo, with complete ancillary measures, would amount to an economic counterpart of full scale military measures in Korea. In view of the enormous sacrifices, both human and economic, being made by the United States in Korea, and in view of the patient efforts made by the United Nations Command to bring about an armistice, it would be entirely reasonable for the United States to press the British, French, and others to accept the further economic losses which would result from their application of a total embargo.

If a total embargo is unacceptable to a majority of United Nations Members, including our key allies, the United States Delegation should seek to have as many additional categories of items as possible added to the five categories presently embargoed under the May 18 resolution. The United States Delegation, after consulting the Department, should support the most extensive list of additional categories and ancillary measures which will receive wide support in the General Assembly.

As to (1) UN procedure and (2) the possibility that others may propose the extension of the embargo without General Assembly action and without publicity, see the discussion of these points under “B” above.

See Annex 4 for a list of the measures which might be considered.

Annexes 1, 2, 3, and 4 referred to above have been omitted from this copy. They are a part of U.N. General Assembly document SD/A/C.1/376.²

1. Prepared as a position paper for the Sixth Regular Session of the U.N. General Assembly. A covering memorandum of October 31 by George Denney, Secretary of the Steering Group on Possible U.S.–U.K. Talks in November, indicated that this paper was drafted by Walter S. Anderson, Jr. of the Bureau of United Nations Affairs, and that it was approved at the working level in the Departments of State and Defense.

   The Sixth Session of the General Assembly lasted from November 6, 1951 to February 5, 1952, but no discussion was held on Korea or Chinese involvement in Korea until 1952.

   This paper was also designated as document NOV D–4b in the U.S. records of the meetings of the Foreign Ministers of the United States, the United Kingdom, and France held in Paris and Rome, November 2–30. For further information on these meetings, see the editorial note, vol. iii, Part 1, p. 1312. Document NOV D–4/1b, November 1, a negotiating paper based on this document of October 30, is printed infra.

2. United States Government “Position Paper on Economic Measures against Communist China”, April 12, 1951; p. 3. [Footnote in the source text; for text, see p. 1953.]
3. Circular telegram No. 784. [Footnote in the source text; not printed, but see footnote 1, p. 1992.]
2. Not printed.