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

303. Letter From Secretary of Commerce Hodges to Secretary of State Rusk⁰

Washington, October 20, 1961.

Dear Dean: In response to your letter of October 9, 1961¹ on my proposal to institute improved export controls regarding the use abroad of United States exports in goods intended for the Soviet bloc, I have issued instructions to place before the Advisory Committee on Export Policy at an early date a policy statement and the specific lists, or appropriate summaries thereof, required to implement that policy. Following such discussion, if then desired, I shall schedule the matter for consideration by the Export Control Review Board. I hope that these two actions will provide adequate opportunity for examination of relevant foreign policy considerations but will not unduly delay moving ahead with the program.

You will recall that on October 3, 1961, I also sent to Secretary McNamara an identical letter on this problem. On October 11, a response was received from Deputy Secretary Roswell Gilpatric concurring in the proposal and offering assistance in the technical sphere. Enclosed are copies of his letter and a reply.²

At this time, however, I do wish to clarify several apparent misunderstandings which are reflected in your letter.

You appear to have been advised that present United States controls already “afford us a large measure of protection” in this problem area. To the contrary, I have found that controls governing such misuse of United States exports have been so tightly drawn in the past as to have little real application and to have been so inadequately disseminated as to be unknown to broad areas of the United States and international trading community. These are additional underlying reasons why I consider the present situation to be untenable and to require prompt action to improve and extend such controls.

Your letter also implies that the purpose of this effort is “to impose the United States level of controls, beyond Coordinating Committee (CoCom) controls, on non-U.S. origin goods.” This was certainly not my intent, and I do not know on what basis such a statement is made. Had such been my intent, I would have clearly so indicated in setting forth in my initial letter the reasons which led me to initiate a further control effort. As you know, the Export Control Act of 1949 (as amended) is not dependent upon the activities of COCOM although, in many instances, particular United States controls are to varying degrees made ineffective by the absence of supporting controls by CoCom. The present control problem is one which has been examined within the Department of Commerce at various times over many years. A principal reason for the inadequacy of past controls in this area appears to have been the inability to absorb a significant increase in license application workload under past staffing conditions. I feel that I must undertake such additional controls as are needed to carry out the basic objectives of the Act and must somehow find the means to handle such additional workload as may be involved in fulfilling that responsibility. I take this stand not only in matters involving the national security but equally in implementing important foreign policy objectives and in protecting the domestic economy in short supply situations. My first priority in the present effort is to ensure that our exports are not used abroad to frustrate the intent of that Act and our policies thereunder. I hope these statements will dispel the faulty understanding of my intent reflected in your letter.

Lastly, you have noted, I have already recognized that my proposal has foreign policy implications. The basic adverse impact, of course, falls on United States firms, United States subsidiaries and licensees abroad and certain other Free World firms. Some of the adverse reaction of these groups may well spill over into the foreign policy field. If there are truly serious disadvantages to the proposal from a foreign policy standpoint, let us examine them fully in the course of the ACEP and ECRB discussions of the proposal. Since the proposal basically concerns the promotion of our national security, I hope that there will be no request to modify the proposed program to any serious extent except on the basis of quite clear evidence of significant adverse impact on truly important United States foreign policies.

Sincerely yours,

Luther H. Hodges

0. Source: Department of State, Central Files, 400.119/10-2061. Confidential. Attached to the source text is a February 20, 1962, covering memorandum with a handwritten note by Robert B. Wright (E/MDC), stating that no reply was necessary.
1. Secretary of State Rusk’s letter of October 9 replied to one from Secretary of Commerce Hodges of October 3, which proposed export controls for U.S. components of items produced abroad for export to the Soviet bloc countries and Poland. Rusk stated that extension of U.S. controls ran “the risk that the adverse effect upon our relations with our friends and allies would outweigh the advantages to be gained.” He suggested that the Advisory Committee on Export Policy discuss Hodges’ proposals and then he would like to consider them again from the standpoint of foreign policy. (Ibid., 400.119/10-361)
2. Not printed.