EXECUTIVE COMMITEE OF THE ECONOMIC DEFENSE ADVISORY COMMITTEE MINUTES 2:00 P.M., MONDAY, APRIL 15, 1957 ROOM 1213 MAIATICO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61S00527A000100180028-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 12, 2016
• Document Release Date: September 5, 2000
• Sequence Number: 28
• Publication Date: April 17, 1957
• Content Type: MIN

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ED/ EC M-231
.April 17, 1957
EXECUTIVE COMMITTEE OF THE
ECONOMIC D S ADVISORY COMFIT=
MINUTES
2:00 p.m. Mond! Aril 15 1957
Room 121,3 ma a is o
MDAC Defense
Mr. Hale, Chairmanrtino
Mr. Levin
Mr. Kramer, Executive Secretary ICA
Mrs. Lese, Committee Secretary Mr. Slaght
State
Mr. Wright
Miss Worthing
Commerce
.Mr. Hockersmith Treasury
Mr. George W. Pollak
Agenda
1. Consideration of Defense papers re Machine Tools and
Electric Furnaces.
2. Consideration of Paris report on April 12 CHINCOM meeting.
(Ref. POLTO 244 6.. 4/13/57)
Recapitulation of preparation necessary for EDA.C.
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1. Consideration of Defense papers re Machine Tools and Electric Furnaces.
a. Machine Tools
Decision
The Executive Committee examined the Defense revised proposal on machine tools
and the impression of the majority of the members was that it seemed to be covered
by a rationale which is different from the rationale of our general package; that
the majority of the members considered that making a recommendation as outlined by
Defense would prejudice the hope that we have of our "package" being bought on the
rationale of the other 40 items; that it was the Executive Committee decision that
EDAC would have to settle this matter because it cannot be agreed in this Committee.
Discussion
The'Executive Committee Chairman in discussing the paper submitted by Defense
in support of its views on machine tools said that it had been his hope that the
redeveloped rationale would fit within the general concept which covers the other
items selected. He did not feel that the revised proposal met this requirement
and asked the Defense member to comment on his agency's recommendation.
The Defense member said they had attempted to clarify some of the questions
which had been raised at the recent EDAC. meeting with respect to the transfer of
items from the China differential to List III. This matter was thoroughly dis-
cussed in Defense at a top level. Defense is convinced that machine tools are
in short supply in Communist China, hence, it was their conclusion that machine
tools should be completely embargoed to Communist China. They are willing to as-
sist the State negotiators to accomplish this end.
Thq ICA member stated that, in his judgment, if this item is included in the
listing it will weaken the U. Be chances in negotiation.
The Commerce member shared the ICA view. He expressed the opinion that if we
attempt to ask for extension of the control over machine tools beyond that which is
now proposed we will damage our case, and our chances of a successful negotiation,
which are already quite slim, will be still further impaired.
With regard to para. 2, page 2, of the Defense revised paper on machine tools,
the Chairman said that a proposal of this kind, which only affects IL III may be
ruled out of order by the Chairman of COCOM when presented by the USDel.
The Defense member felt the point was well taken and suggested that the recom-
mendations contained in that portion of the paper (para. 2, page 2) could be held
in abeyance. He noted that Defense could not agree to dropping the present cover-
age of C-001 until the List III proposed changes had been made.
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The Commerce member noted chat Defense is recommending that C-001 be trans
ferred in toto to IL I1I. He suggested that if this is the Defense intent, the
simplest way would be to have the definition on-List III read wall machine tools
n.e.s.s'. It was pointed out, however, that this type of listing would not result
in COCOM reports on each as Defense desired.
The Committee felt that this problem would have to be referred to MAC. The
Chairman raised the point that a method,of negotiating this item will have to be
devised if adopted by EDAC. He asked whether the Executive Committee should make
some suggestion to EDAC concerning its inclusion with the other selected items.
The Defense member replied that he would have to check further with his agency and
would report back to the Committee.
b, Electric Furnaces
Decision
The Executive Committee reviewed the revised Defense paper on electric furnaces
and found that the Committee-cannot accept this as,.beingan item readily embraced
under the rationale for. the whole recommendation that has been made; that the matter
must be settled by EDAC as to whether or not the. item should be added to the package.
There was no strong supporter for the Defense position. The Executive Committee was
not in sympathy with the Defense paper because there has been no demonstration that
the Sino-'Soviet bloc is incapable of meeting the demands for electric furnaces with-
in the bloc (including C ommanist China) .
Discussion
The Chairman noted that the rationale for electric furnaces as presented in the
Defense revised paper is broader and more general than the rationale of the basic
study. He felt no case could be made on the grounds. of bloc shortage of this item
or their incapability to meet their need for this commodity under current conditions.
The Defense member said there is going to be a growing demand for electric
furnaces to produce ferrous alloys in the near future. The Defense view is that it
is a very important item, needs to be controlled, and they feel it should be nego-
tiated for control.
.When a member suggested'that a case had not been made, the Defense member replied
that Defense was prepared during the negotiations to give all of the evidence,nec-
essary. It was suggested that the needed. power and scarce alloy materials were vir-
tually all under very tight control.
The Ad Hoc Working Group Chairman reported that this item had been carefully con-
sidered and that a .detailed conclusion had been reached to drop the item from con-
sideration.
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2. Consideration of Paris re ort on April 12 CHINCOM meeting.
(Ref. POLTO 2 446,, 4113/57)
Decision
The members would study the State draft circular instruction and submit sug-
gestions and comments to the State member.
The Chairman called attention to.POLT? 2446, the message received from Paris
following the CHINCOM meeting of April 12, and asked the State member to give some
reflection of the impact the message has had on the Department. He also asked for
suggestions which the Executive Committee could follow in undertaking the job as-
signed to it by EDAC.
The State member said the picture is clear. No part of the French proposal is
acceptable and therefore the Department feels that we should go forward with the
proposal we have worked out. The British have already been informed and the other
PCs will also be notified about our proposal. We will also make known to them our
willingness to provide a list of commodities in advance of the CHINCOM discussions
if-they so desire. Because of this requirement to provide an advance list he was lqwp~
concerned with the machine tool and electric furnace problems. A solution was
necessary as soon as possible. The State member presented a draft instruction
stating what Washington is planning to do, and setting forth the line which will be
taken with the other countries. He asked the members for suggestions and clearance
on this outgoing message.
The Chairman inquired whether the Executive Committee was prepared to tell State
that, for the purposes of the bilaterals, they may use the present list which Commerce
has provided (adding the Defense definition as submitted) with the understanding that
the EDAC consideration we are requesting will have effect on the U. S. presentation
in CHINCO147 Will State find it agreeable to present these lists, including machine
tools and electric furnaces, with the notation that the U. S. still has two or three
items under review and, consequently might change the list prior to submission to
CHINCOM?
The State member replied this might give the impression that there is greater
elasticity than exists and it might give other countries the idea they can bargain
with'us. They may think we have more flexibility than we actually have.
The Chairman remarked that the Ad Hoc Working Group's activities will be con-
cluded within the next day or two, hence, this matter could be put before EDAC on
Thursday or Friday. The EDAC decision could be incorporated in a new chart for
distribution on Monday, April 22.
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3. Recapitulation of preparation necessary for EDAC.
The Chairman called attention to matters to be prepared for EDAC consideration
at a meeting later this week.
a. 'He asked the State member to notify the chair as soon as the pouch documents
reporting on the April 12 CHINCOM meeting are received; copies will be made and dis-
tributed to the members for discussion at an Executive Committee meeting to be held
at an early date. After ascertaining the reaction of the group, the Committee will
decide upon the nature of the required report to EDAC.
b. The problem of machine tools and electric furnaces will also be submitted
for the consideration of EDAC.
The Chairman urged that the necessary documentation be ready for consideration
by EDAC on April 18 or 19 at the latest.
Distributions
EDLstPPartsI&II
I (Limited)
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