150. Memorandum of a Conversation, Mid-Ocean Club, Bermuda, March 22, 1957, 10:30 a.m.1
PARTICIPANTS
- United States
- Secretary Dulles
- Ambassador Whitney
- Senator Walter F. George
- Mr. Phleger
- Mr. Elbrick
- Mr. Berding
- General Goodpaster
- Mr. Parsons
- Mr. Walmsley
- Mr. Timmons
- Mr. Macomber
- Mr. Dale
- United Kingdom
- Foreign Secretary Selwyn Lloyd
- Mr. P.H. Dean
- Sir Harold Caccia
- Sir Frederick Hoyer Millar
- Lord Hood
- Sir Richard Powell
- Mr. Dennis Laskey
- Mr. J.A.N. Graham
- Mr. Dobbs
- Miss Rolleston
SUBJECT
- U.K. Association with the Continent
[Here follows discussion of unrelated subjects.]
Far East
Mr. Lloyd opened the discussion saying that this would be a preliminary run since the Prime Minister wished to discuss this problem further himself. He noted the existence of “virtual unanimity” among both political parties in the UK on China trade. He pointed out that it was becoming extremely difficult to explain the “China differential” in Parliament, and that the British people regard the Russians as their principal enemies rather than the Chinese. He mentioned that the British had made considerable use of the exception procedure but that there was little room for further expansion in this direction. Lloyd said that the British now feel very strongly that the time has come to abolish the differential. He maintained that the present controls harm the free world more than they do the Communists and hence are a political liability. He foresaw little chance that a free Malaya or Hongkong would be willing to operate under a control system in which the China differential was maintained. He said the British also believe the existence of the differential brings the whole system of trade controls into disrepute, making [Page 435] it harder to maintain them against the USSR and increasing the possibility of the disintegration of the entire system. He said that the US is practically alone in attempting to maintain the differential and that our attitude leads to anti-American feeling in Britain. Lloyd stated that the British and Americans had talked about this question thirteen months ago in Washington2 and had agreed to an item-by-item review designed to see where relaxations could be made. He said that this examination had produced no results and that Britain could not hold on to the differential much longer. Moreover, he added the British do not believe it is right to do so. He said that the only reason they have stuck to the differential as long as they have was to keep their policy aligned with ours.
The Secretary said that this was a hot subject with us too, although the domestic problem is reversed here. He noted that the emotional feeling in the US about China is stronger than the feeling about Russia due primarily to the casualties suffered during the Korean war and to imprisonment of US civilians by the Chinese Communists. He said it is less a question of intellectual justification than of emotional feeling. The Secretary stated that nevertheless we have been giving renewed consideration to the “possibility of getting rid of the differential”, perhaps by adding a few items to the list and getting rid of the balance. He said that we could not discuss our plans in detail until Congress has been consulted but that we hope to be able to take a fresh international position on this matter within a couple of weeks. The Secretary added that if it could be made clear that an economic shift of this type does not presage a political shift and if at the same time the US and the UK could get closer together on the political side it would help us a great deal.
Mr. Lloyd asked whether the Secretary intended this move on the political side to be public and was answered in the affirmative. Then Mr. Lloyd said “many words would have to be eaten in the UK” and that considerable public education would be required.
The Secretary noted that if we should bring Communist China into the UN it would make the problem which has arisen with the entrance of new members into the UN even worse. He said that neither our own interests nor the requirements of the Charter would be met by seating Communist China. He noted that the British have gone along with the moratorium thus far but that it has appeared to us that they were doing so unwillingly. If their support could look more genuine it would help us with the economic problem of the differential.
[Page 436]Mr. Lloyd stated that the change in composition of UN membership has changed many UK views. He said now that we have no western working majority, the Chinese Communist capacity for mischief would be even greater.
The Secretary suggested that the British might now give some thought as to whether we could strike a balance on these two items. He observed that our positions in Asia have little depth and that people out there are becoming nervous over whether we will accept the Chinese Communists. He added that it was for this reason he gave his recent speech in Canberra on the subject of Communist China which he had not originally intended to do.3 Mr. Lloyd stated that the British position on the moratorium would become easier if we could give ground on the trade side, but that it should not look publicly as though we were striking a bargain. Secretary Dulles said that the morning’s communiqué should avoid discussion of this matter.
- Source: Department of State, Conference Files: Lot 62 D 181, CF 867. Secret. Drafted by Dale. Delegations from the United States and the United Kingdom, led by President Eisenhower and Prime Minister Macmillan, met at Bermuda for a 3-day conference, March 21–23, in order to discuss matters of mutual concern.↩
- For the Dulles–Lloyd and Eisenhower–Eden discussions on China trade controls on January 31, 1956, see Documents 93 and 94, respectively.↩
- For text of Secretary Dulles’ speech before the SEATO Council, March 12, 1957, see American Foreign Policy: Current Documents, 1957, pp. 1116–1117.↩