66. Telegram From the Department of State to Secretary of State Rusk, at New York0
Tosec 59. Eyes only for Secretary. (Attention: Mr. Swank) From Dutton. Per our conversation:
“Memorandum for the President, subject: denial of most favored nation treatment to Yugoslavia and Poland.
It is my judgment and that of all of the senior officers of the Department concerned with this matter, that the denial of most favored nation treatment to Yugoslavia and Poland1 will have the most serious consequences for our relations with these countries and toward our entire position in Eastern Europe. It would run directly counter to our policy of holding out an alternative to those countries which are striving to be independent of international Communism and free from Soviet domination. [Page 132] It would cause the loss of effective gains we have made in projecting United States influences into Eastern Europe. It would destroy many important and identifiable pro-Western elements in those countries who, according to our best information, are in the ascendancy.
The denial of most favored nation benefits will have most serious effects on Yugoslav and Polish trade with the United States. Analysis of trade statistics with Yugoslavia indicates that virtually all of its exports to the United States would be subject to significantly higher duties. Poland has enjoyed MFN benefits only since later in 1960 and has thus only begun its efforts to develop a market here. These efforts, which have had our encouragement, would be nullified. The loss of trade with the United States, taken in conjunction with other international developments, such as the effects of the Common Market on their trade with Western Europe, may be expected to lead Polish and Yugoslav regimes to undertake a realistic, if not pessimistic, reassessment of the wisdom of their reliance on the West. We will have given them but one alternative, that of complete dependence on the Soviet bloc. We will thus have contributed much to an objective neither Stalin nor Khrushchev has been able to achieve, the unity of the Communist world.
At a time when international Communism is seeking to advance its position everywhere in the world I fail to see why we should now abandon our efforts to carry the war to the enemy. We have every reason to be greatly encouraged by events in Eastern Europe which are unquestionably running in our favor. There are innumerable evidences that in each of the countries in the Eastern European Soviet bloc there are mounting pressures for liberalization and for better relations with the West. In Yugoslavia we have a clear demonstration of the benefits of our policy. We should not be swayed from our course by public statements of old-line Communists such as Tito. We are now witnessing in Yugoslavia the gradual transference of power to younger and less doctrinaire men who are determined to hold Yugoslavia from communism itself. This is not the time for us to write off our extensive investment in this area and to ignore our vital security interest in the future of these countries. The only profit of such action would be for international Communism and Nikita Khrushchev. Dean Rusk”
- Source: Department of State, Conference Files: Lot 65 D 533, CF 2150. Secret; Niact; No Other Distribution Even On Limited Basis. The Secretary was attending the 17th session of the U.N. General Assembly. See also Document 132.↩
- On October 4, the Congress passed the Trade Reform Act of 1962 that included a provision denying most-favored-nation rights to any state under Communist control. For text of P.L. 87–974, approved October 11, see 76 Stat. 872. See also Document 130.↩