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

316. Letter From Secretary of State Rusk to Secretary of Commerce Hodges⁰

Washington, August 9, 1962.

Dear Luther: Thank you for your letter of July 20 giving some further thoughts on the matters discussed at the National Security Council meeting on July 17.¹

Since receiving your letter, we have also received the National Security Council Record of Action (NSC Action 2455) of the Council meeting of July 17, 1962. The Record of Action conforms with my understanding of the agreement reached on that occasion with regard to the nature of the approach to our Allies, namely, that as a complementary approach to economic defense an effort would be made in an appropriate Allied forum “to draft a Western code of fair trade practices for presentation to the Soviet Bloc”. In this connection, we have already undertaken work within this Department on the question of a code of fair practices, and are reviewing that work at the moment as a basis for further discussion with the other interested agencies.

It seems quite clear that the receptivity of our Allies to the proposal for establishment of a code of fair practices in East-West trade will depend on their initial understanding and support of our concern at the need to develop uniform ground rules covering the conduct of Allied trade with the Union of Soviet Socialist Republics and the Bloc. It will be necessary to obtain their agreement at a high level on the desirability, as a general matter of foreign policy, of agreeing upon such principles. In this connection, I agree with your suggestion that at an appropriate time preliminary high level approaches be made bilaterally to prepare a favorable reception for our formal multilateral approach. Only following agreement by the NATO countries as a group would it be possible fruitfully to consider such specific matters as the development of uniform rules to cope with disruptive pricing practices, the resale of primary commodities, inadequate arbitration, patent and copyright procedures, and the lack of reasonable access by businessmen. I think you will agree that these are all rather complicated and diverse matters which will involve considerable study in order to coordinate an Allied position thereon.

As to the appropriate international forum for these projected discussions, it would seem to us that the NATO Council of Economic Advisers (ECONAD) would be initially the suitable and logical place for such discussions with our principal Allies. As you know, with the exception of the question of strategic trade controls, the ECONAD is the forum in which questions of economic relationships between NATO countries and the Soviet Bloc have been discussed—for example, Soviet oil, oil pipelines, credits to the Soviet Bloc. If we meet with some success in NATO, we could then consider broadening our approach to other forums.

We will be taking up with your Department shortly our detailed proposals for the code of general trading practices.

With warm personal regards,

Sincerely,

Dean²

0. Source: Department of State, Central Files, 400.119/7-2062. Secret. Drafted by Robert B. Wright and James L. Colbert (EUR/SOV) on July 27. A copy was sent to Carl Kaysen. The source text is Tab A to a July 30 memorandum from G. Griffith Johnson (E) through Under Secretary Ball and Executive Secretary Brubeck to Rusk, which explained the need to call Hodges’ attention to NSC Action No. 2455 (Document 312) because “Hodges’ letter was almost certainly written before he received NSC Action 2455.” (Department of State, Central Files, 400.119/7-3062)
1. In his July 20 letter to Rusk, Hodges called for a U.S. approach through the Consultative Group in Paris “to get our Allies to agree to improve the level of multilateral export controls toward the Sino-Soviet bloc, as proposed at the NSC meeting on Tuesday, July 17.” He suggested discussions in the Consultative Group for joint action on expanding trade in consumer goods with the Soviet bloc or arranging U.S. bilateral trade agreements with Soviet bloc countries for trade not under multilateral controls. He also suggested a commercial code of trade behavior. (Ibid., 490.119/7-2062)
2. Printed from a copy that indicates Rusk signed the original.