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

307. Current Economic Developments⁰

Issue No. 644

Washington, February 27, 1962.

US-UK HOLD EAST-WEST TRADE TALKS

Representatives of the US and UK held bilateral talks on East-West trade controls in Washington February 19-23. Discussion centered around interpretation of the embargo criteria of the Coordinating Committee on Export Control (COCOM). The British put forth three principles which they would like to have accepted in the interest of uniform interpretation of the COCOM embargo criteria. Application of these principles, in the British view, would lead to a reduction of at least 50% in the coverage of International List I (embargo).

The British were very anxious to have further technical discussion on their proposed interpretive principles as they applied to particular items, despite lack of full agreement on the principles themselves. The US finally agreed to participate in more detailed talks in London the week of March 19 on the understanding that both sides would be prepared to give a preview of their probable positions for the 1962 COCOM List Review which begins in early May.

In addition to discussing COCOM issues, the US took the opportunity to make additional representations for UK support of our proposed embargo on wide-diameter pipe and related oil pipe equipment which is now before NATO.

UK Wants List Reduced

The discussions began with an exchange of views on Western objectives in economic relations with the Soviet bloc. The UK expressed agreement that certain aspects of East-West trade should be approached with caution and that certain controls are needed. These controls, however, must continue to make practical sense in light of the current assumptions of nuclear war and the latest estimates of the bloc’s economic capacity.

The British representative said that his Government was prepared to accept the existing criteria and was not raising any question about the COCOM Atomic Energy List, Munitions List or the existing arrangements for military and commercial security; but the UK Government believes that International List I is out of date in important respects as it now stands and could be substantially reduced both as to number of items and their scope. The British noted the considerable differences in approach between our two governments at the last COCOM List Review and expressed a desire to avoid a repetition of such a dispute at the List Review commencing in May.

The British argued that, in light of their domestic political pressures, it was necessary for COCOM controls to be “defensible in terms of the latest strategic thinking which included general and lively insistence that a healthy economy is the cornerstone of our defenses.” In this regard, the UK suggested three principles for interpretation of the strategic criteria.

First, the British believe that the common pattern of use of a product, rather than the alleged pattern of use in the Soviet bloc, should determine whether it is to be regarded as of principally military application. A particular type of equipment should not be embargoed merely because its use in the bloc is believed to be mainly military. The bloc use may be predominantly military because in these countries military needs come first and there may not be enough of the equipment to meet civilian requirements as well. The only logical way to judge a case, in the British view, is by reference to the pattern of use in industrialized countries generally. An example of this principle is the use of electronic computers.

The second principle the British advanced is that the importance of an item should be taken into account as well as its description in evaluating it against the criteria. What really matters is the current significance of the item in waging war or in producing military equipment. The type of thing the British have in mind here is jacketed containers for storage of liquefied gases.

Their final principle is that the control of equipment should be relaxed when such equipment has been in normal commercial use for so long that the “know-how” could be considered common property. The British believe there are a number of items, especially in the electronics category, which become less and less important strategically as commercial uses grow. After a certain period, say two to four years, varying with the type of equipment, any embargo loses its justification.

US Reshapes Principles

The US was able to agree to a considerable extent with the UK position on the second and third of the interpretative principles proposed but not on the first principle. We informed the British that we would be disposed to rephrase the three principles suggested along the following lines:

a) that the pattern of use of a product in the Soviet bloc should determine whether it is to be regarded as having principally military applications: where the pattern in the bloc is obscure, the pattern of use in the most nearly comparable Western experience should be the guide;

b) that COCOM should avoid the listing of items which, while meeting the criteria, are of minimal strategic importance to the bloc;

c) that the items which are controlled solely for reasons of COCOM criterion (b) should be re-examined periodically to establish whether they should continue to be embargoed and whether the use of a time period cut-off is appropriate.

Following discussion of individual points made by the US, the British representative reached the conclusion that the UK could agree with much of what we said. But there were still a number of unresolved issues. We do not believe that we can prepare for the contingency of nuclear war to the exclusion of extended large-scale conventional warfare. Later high-level discussion of this important policy issue through other channels is planned. The US could not go along with the British view that the pattern of use of an item in the Western industrialized countries rather than the possible use in the Soviet bloc should determine military use under the present COCOM criteria. Finally, we could not defend anything approaching a 50% reduction in the number of embargoed items on List I.

The US representative noted that we are approaching the 1962 COCOM List Review as an “up-dating” of the list to reflect advances in technology and changes in the Soviet bloc supply situation as it bears on military production. We assume that this is likely to result in a few additions, a few deletions, and possibly somewhat more numerous redefinitions which cannot be clearly characterized as one or the other.

This approach is not, in our thinking, different in concept from that which governed in the last two annual COCOM reviews. While we do not visualize a major extension of the COCOM list on the one hand, neither do we contemplate a major contradiction as proposed by the UK.

Pipe Embargo Discussed

Apart from the COCOM list talks, discussions were also held on the US proposal now before NATO for an embargo on oil pipe and equipment. Emphasis was placed on the potential effectiveness of such an embargo since both sides agreed that differences in the assessment of the military importance of the pipeline system rested on differing concepts of the types of possible warfare. An agreed US-UK-French military position on the significance of Soviet pipelines is expected to be reached in talks beginning March 12 to develop annual intelligence estimates for NATO planning.

The British argued that a pipe embargo would not be effective since by putting aside the construction of gas lines, which represent about half of Soviet pipe requirements, the Soviets could finish oil lines from their own resources without delay. Our representative replied that data on Soviet pipe production were too sketchy; that we should not assume the Soviets would abandon already begun gas lines; that major adjustment of planning always resulted in delays; and that the inclusion of pumps, valves, fittings, and other related equipment in the embargo would increase Soviet difficulties and the probability of delay. We informed the British that we feel strongly about a pipe embargo and thought that other NATO countries were prepared to agree to such an embargo if the UK changed its position.

The British representative promised to report our views to his Government but doubted that the British position will change. He understood that the British Ministers were not prepared to accept any additions to the COCOM embargo list unless reasons therefor are especially strong.

[Here follow articles on unrelated matters.]

0. Source: Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248, Current Economic Developments. Secret. The source text comprises pp. 1-4 of the issue.