Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

301. Telegram From the Department of State to the Mission to the North Atlantic Treaty Organization and European Regional Organizations⁰

Washington, June 28, 1961, 7:31 p.m.

Topol 1850. Ref: Polto 1744,¹ Polto 1758 (Item 3).² Wireless file EUR 104 and SEF 2 of June 22 carried text Commerce press release on same date re change in US export licensing policy to permit cash sales of subsidized surplus agricultural commodities to EUR Sov bloc.³

May inform EconAd revision has no special significance other than tidying up of various administrative limitations affecting exports non-strategic goods to EUR Sov bloc and permitting commercial sales on competitive basis with other exporting countries. Possible sales in free world by US exporters in past have been affected by efforts to deny these commodities to Sov bloc, including transshipment controls, etc., which have affected markets for the commodities in free world as well as bloc countries.

Executive Branch policy denying cash sales subsidized agricultural commodities to EUR Sov bloc at world market prices based on Cabinet decision 1954 as result public and Congressional outcry over proposed butter sales to USSR which at subsidized prices would have been lower than prices to American consumers. This decision modified by CFEP in 1956 and only required administrative action to alter export licensing policy. Such action has been under consideration for some time.

It is difficult to anticipate quantitative effect of liberalization since number of factors would influence bloc purchases from US. In general, market prospects would appear to be better in other East EUR countries than in USSR. However, significant purchases by the former could not be expected without extension long-term credits, which precluded to most by law. EE countries import cotton, feed grains, fats and oils. USSR is net importer of edible fats and oils, and imports some rice. While it imports relatively small quantities of wheat from Canada and considerable cotton from Middle East, USSR is net exporter of both commodities.

In exercising licensing authority Commerce will observe reasonable safeguards to assure that these commodities are not transshipped to Communist China, North Korea, North Viet Nam and Cuba. Where evidence indicates strong likelihood of transshipment to such destinations, will not approve licenses. Exporters will be required to supply commitments from importers in the bloc countries that the commodities will not be reexported to another destination. However, it is recognized that maintenance of effective destination control with respect to these countries poses certain practical difficulties. In any event, in considering licenses Commerce will take into account quantities involved in relation to requirements of country concerned, insofar as can be determined. Any possible applications for East Germany would of course be disposed of in accordance with established US policy toward East Germany.

Rusk

0. Source: Department of State, Central Files, 460.509/6-2171. Official Use Only; Priority. Drafted by M.S. Young (OR/ECD); cleared by McLaughlin (RA), Colbert (SOV), Katz (EE), Turpin (B/CEA), Cash (GER), Volin (paragraph 4) (Agriculture), and Sweeney (paragraph 5) (Commerce); and approved by Clarence T. Breaux.
1. In Polto 1744 from Paris, June 22, Finletter recommended informing the NATO Economic Advisers’ Committee of the change in export licensing policy reported in Topol 1850. (Ibid., 460.509/6-2261)
2. Dated June 26. (Ibid., 375/6-2661)
3. Not found.