EDAC WORKING GROUP I, INTERNATIONAL EXPORT CONTROL SYSTEMS MINUTES
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CIA-RDP62-00328A000100110019-4
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December 12, 2016
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Publication Date:
January 17, 1957
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WG I M-77
January 17, 1957
EDAC Working Group I. International Export Control Systems
MINUTES
1:30 p.m., Wednesday.,_ January 9 1957
Room 09 Maiatico
Attendance
MDAC ICA
Mr. Levin, Chairman Mr. J. Tucker
Mr. Wight
Mr. S. Tucker CIA
Mr. Shaw
State
Mr. Henderson
Commerce
M. George
Defense
Mr. Carmody Miss Rector, MDAC, Committee Secretary
Agenda:
Item 1.
Control of Ship Sales.
(Ref. WG I D-53, 11/30/56; WG I D-53.1, 12/7/56)
Item 2.
German Tungsten Wire for Rumania.
Netherlands Tungsten Wire for Poland.
(Ref. POLTO 1527, 1/!x/57; POLTO 1491, 12/26/56;
CA-9568,
6/1/56; WG I D-1668.6)
Item 3.
1957 List II Review - Problem of 3(d) Procedure.
(Ref. POLTO 1528, 1/4/57; POLTO 1182, 12/21/56)
Item ?.
UK Ad Hoc China Exception for Tires.
(Ref. POLTO 1530, 1/4/57; POLTO 1516, 1/2/57; London Embtel 3518,
12/31/56; WG I D-0/1821.1)
Item 5.
Draft Instruction on Possible Licensing of Mercury to Poland by Italy.
Item 6.
(Ref. Mr. Eastman's (State/ECD) draft of 1/1/57)
Reconsideration of China Exception - UK.Fused Aluminum Oxide Powder, 0/2375.
Item 7.
(Ref. POLTO 1107; WG I M-70, item 7; WG I M-71, item 1; WG I M-75,
Note h; Commerce paper)
Nylon Parachute Cloth - Item 1930.
(Ref. WG I D-1930-3., 1/2/57)
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1. Control of Ship Sales.
(Ref. WG I D-53, 11/70/56; WG I D-53.1, 12/7/56)
Decision
It was agreed that arrangements for a further study of the entire ships problem,
utilizing WG I'D-53 and WG I D-53.1, and designed to provide the necessary informa-
tion on the basis of which to evaluate the current COCOM controls, would be worked
out by State, through its intelligence organization, and CIA,, through 25X1A9a
(Subsequently, the Defense member suggested that Mr. McCaffrey also participate in
they arrangements. The Chairman agreed, and so notified State.) An outline for the
study would be submitted to the Working Group by these people within the next ten
days, together with a statement as to the date the review was expected to be comet
pleted,so that members could comment on approach,' adequacy, and timing.
Discussion
The Chairman referred to the document submitted to the Group by the Defense
member (WG I D-53), based on studies by various areas of Defense and the intelligence
community, of the "Significance of Shipping to the Sino-Soviet Bloc Build-up", and to
the exchange of correspondence between Mr. Marshall Smith of Commerce and. the EDAC
Chairman on the subject of "COCOM Controls and the Petroleum Problem" (WG I D-,53.l)
which had been referred to the Group by the Chairman of EDAC with the caveat that
WGI defer consideration of the suggestion that tankers be built in West European
yards for U. Se delivery and for paynent through P.L. 480 counterpart.. The Chairman
said that it seemed to him that the total problem of dealing with ships could appro-
priately be divided into three parts. The material before the Group seemed to 'be
addressed to the first part of the problem, i.e. putting the substantive material
available and the over-all substantive conclusions into form that would be useable
for discussion of appropriate action to be taken. Once this sort of substantive
presentation, with fairly firm conclusions agreed upon among the interested agencies,
was before the Group, it could then consider the question of what were the action
possibilities, and finally the question of what action should betaken. He asked
the Defense member for comments on the Defense paper.
The Defense member stated that it was the Defense position that everything
possible should be done to increase the effectiveness of controls on ships and ship-
ping. He'noted that the document before the Group had been excerpted from a much
larger document. The information contained here had been approved by. the JCS for
release to the Group, but the had not, Defense would like to have the
matter considered in terms of w a pressures could be brought to bear on our allies.
Iflit was determined to use pressures, Defense would like to suggest the problem of
the scarcity of ship plate. Spokesmen for the industry in this country claimed they
were getting only about 40% of their requirements for ship plate. He had no idea
what the conditions were regarding the export of ship plate., but it had been sug-
ge;;;ted that this might be one of the items used to exercise moral suasion on our
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allies in getting them to agree to tighter controls on s ipping. The commerce
member advised that-Commerce did not control exports of this item, but thought that
figures on exports could be obtained.
25X1A9a of CIA advised that for some time he had;een engaged in revising FDIC
ID-1 The original document contained information through 1954. The revision
would contain tables showing deliveries from free wor d yards to the bloc in 1955 and
through December 1, 1956; ship construction as of De ember 1, 1956; and ships on order
as of December 1956, as well as corresponding tab for sales of second-hand ships.
The summary tables he had prepared were suppor n each case by individual country
tables showing precise vessels, delivery date guft Status,, and indicating future de-
livery dates through 1960. He noted that thi cov ed only one part of the over-all
problem. To evaluate Western contribution to Sino-Soviet bloc shipping, figures on
the size of the Sino-Soviet bloc fleet would have to be brought up-to-date. Given
25X1A9a the annual accessions to the Soviet bloc fleet from its own resources,,, both Russian
and satellite,,, the seriousness of the Western contribution could then be determined.
advised that the information on the Western contribution in 1955 and 1956
an rough 1960 so far as it was known at this point was being reproduced for dis-
tribution at the next EDIC meeting. He added that it was the intention that these
charts would be revised by periodic addenda as new information became known. The
Chairman agreed that this was an important type of information needed before con-
sideration in any precise terms could be given to the nature of the action problem.
He asked the Commerce member for comments on Mr. Marshall Smith's memorandum.
The Commerce member stated that a matter of timing was involved with respect to
the over-all issue, which might become important, because if we did move toward some
effective attempt at resolving our current COCOM/CHINCOM difficulties, certainly
resolution of the shipping problem was one of our most important aims. This comment;
related both to the general problem and to the more specific proposal in Mr. Smithts
memorandum. Re the latter, it seemed to Commerce that it would be appropriate to
consider whether now would not be a time to try to have Western Europe itself make
some real contribution to a resolution of the tanker problem, which was deeply in-
volved in the delivery of oil, and to seek assurance that facilities will be avail-
able in the future for the delivery of oil to Western Europe. It might be unwise
for the U. S. to undertake the tanker program alone, and as part of any over-all
settlement of the petroleum problem we might seek to have Western Europe use some of
its facilities, possibly replacing some of the orders it now has from the Soviet bloc,
to make an increased contribution to the West. This might not mean that what they
planned to ship to the bloc -- tankers or other vessels -- would notbe shipped. It
might merely delay shipment,, which would be to our advantage.
25X1A9a noted that no tankers were being built for the Soviet bloc anywhere in
the free world, with the possible exception of Finland. The Commerce member said
there were reports which indicated the possibility that the French again may get in-
volved with the bloc on tankers. But whether they were tankers or other vessels
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which we prefer not to see delivered to the bloc., if the available facilities could
be!,moved into the tanker program., this., it seemed to Commerce, would be advantageous.
The CIA member thought that the vessels which were being built for the bloc employed
facilities which could not easily be adapted to tanker production, The Commerce mem-
ber felt other dry dock facilities might be available or might be set up and noted
that much of the same equipment and personnel could be used.
25X1A9a The Chairman inquired of -whether, on the basis of the information he had
compiled so far, he was in a position to make a tentative estimate as to whether the
25X1A9a recent trend in deliveries or commitments or both to the bloc has been on the in-
crease or decrease over the last year or two as compared with the previous few years.
advised that new ships delivered in 1955 from COCOM countries totaled
5o COO GRT; non-COCOM country deliveries totaled 53,000 GRT; the total number cif' new
ships was 81, amounting to 109,878 CRRTO Deliveries in 1956, through December ], from
COCOM countries comprised 42 new vessels, amounting to 100,000 tons., and from non-
COCOM countries an additional 68 vessels, amounting to 65.000 tons. The total was
roughly 50% more than it was in 1955. His figures showed under construction as of
December 1, 1,956, 11 vessels, totaling 33,700 tons, from COCOM countries;, and 6
vessels totaling 13,500 tons from non?COCOM countries. 'In addition,. on order but
not yet under construction as of December 1, 1956, were 30 vessels from COCOM coun-
tries., amounting to 94,000 GRT, and an additional 28 vessels from non-COCOM`countries
amounting to 80,000 GRT, He added that very few new orders were actually placed-in
19'56.
The State member felt that what was needed now was as careful a documentation as
we':could have,'in view of the peculiarly sensitive nature of this issue in the inter-
national communitye He thought that, although the initiative had properly been taken
here, we would have to go quite a bit further in the line of intelligence research
before we could reexamine the issue in WG I. What had been submitted?to the Group
25X1A9a and what was now under review by- were not completely adequate for this,
purposes He preferred that this research be specifically developed by consultation
25X1A9a between Mr. Knoll of State/ECD and
The ICA member said that lacking a fuller understanding of the danger involved
in any construction program which COCOM countries might be undertaking, he did not
feel that-any particular action was warranted at this juncture in maneuvering the
aid program, or the PL 480 program, i.e. he did not feel anything more was called
fc+,.rT now than further investigation and vigilant watching of what might transpire in
Western acceptance of orders for the construction of tankers, etc.
The Chairman thought Defense had made a good start in fxa^nishing some significant
information on the ships problem, but this was only a start, and further analysis was
needed, geared to the type of problem we have to face, namely, the problem of whether
the existing multilateral controls are adequate. The further study should be done in
such a way that the Group could, after reviewing it, knowledgmbly define and evaluate
the action problem in all its ramifications. Therefore he suggested that the Group,
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?5?
through State, with its OIR staff., and the CI.k representative here, refer these
papers to the intelligence community to be worked on further. He agreed with
Commerce that there was going to be a timing problem. He noted that we had not heard
anything specific on the effort Defense had been engaged in for NATO on the Soviet
bloc shipping problem. It might be that the paper presented by Defense was at least
in part information developed for NATO, but this was not clear. The action suggestion
in Mr. Smith's memorandum to which the Group might direct its attention was "the
suspension of any new construction or the negotiation of new contracts for merchant
ships destined for the USSR until such time as the current demand for tankers has been
satisfied by Western European shipyards". The Chairman felt that our recent high-
level approach, authorized subsequent to the Commerce memorandum, on curtailing ship-6
ments generally, would cover this point adequately for the time being, and that we
would not want to make a special issue of this aspect of the trade control problem,
at least-until we had received the responses to the bilaterals and determined where
we were heading in trade control policy generally. The Chairman emphasized that the
further study could not properly omit enforcement aspects-such as chartering, that
the problem should be studied as a whole., and it could later be decided how to pur_,
sue review of the study in organizational terms.
With respect to the Commerce suggestion'that tankers to be built under the pro-
posed new tanker construction program be built in Western European shipyards, the
Chairman suggested that this matter be deferred until after the reply to
Mr. Marshall Smith2s memorandum to the Commerce Under Secretary for Transportation
had been received. He thought it would probably be best to have consultation on
this problem outside the Group before again pursuing the matter in the Working Group.
2. German Tungsten Wire for Rumania,
Netherlands Tungsten Wire for Poland.
(Re?. POLIO 1 27a 1/4/57; POLIO 91., 12/26/56; CA,-9568, 6/1/56;
WG I D-1668.6)
Decisions
a. Re the German case, the Group agreed that a message would be sent advising
that this case has now been reconsidered under the de minimis provision and the ship-
ment is approved under that procedure; and that Washington has therefore not pursued
further its technical analysis in terms of the Note to Item 1668,
b.? Re the Netherlands case., the Group agreed (Defense member reserving but sub-
sequently reporting concurrence) that on the basis of the new technical analysis
orally given by the Commerce member, this shipment should be approved under the Note
to Item 16686
c. The Commerce member agreed to initiate a Technical Task Group analysis of
the way in which the new technical advice affects the previous technical position
forwarded with CA-9568 of June 1, 1956.
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Discussion
The Chairman referred to TOPOL 11.10 of December 28 which had been sent in con-
nection with the German case advising that if there could be a deferral, we would
be glad to review the COCOM document submitted by Germany to determine whether our
position would remain objection or would be modified by the document. We had added
that if deferral were obtained in this case, we would hope the Netherlands would.
also agree to deferral of its similar case., The USDEL had secured a postponement
in both cases to January 11. The Chairman suggested that thel Group first consider
the German case and noted that the incoming message reporting the case had been
garbled and the Group had assumed this case was purely a submission under the Note
tolItem 1668. It turned out that the Germans had submitted the case in accordance
with the minimum shipments procedure and the Chairman asked that the Group.recon-
s.cer this case in terms of its propriety as a de minimis proposal.
The Commerce member did not see that we had a basis for objecting to the German
case as a de minimis proposal, noting that the-quantitywas clearly de minimise The
Chairman and other members agreed. (See also Decision, above, sub-para. a.)
With respect to the Netherlands case, the Commerce member advised that he had
nett information and read a technical report just received containing the opinion of
Mr. Marsden that there was no reason to object since the very low elongation factor
would make it impossible to redraw these coils.. The Commerce member noted that if
Mr Marsdents advice was acceptable, it would enable a favorable finding in this
care rather than an unfavorable finding.
The CIA member reported that the informal advice he had received from his agency's
technicians was completely in line with that given by Mr. Marsden. The elongation
factor would preclude this wire from being withdrawn.. CIL technicians also felt that
it would preclude the wire from being used in applications other than those for which
itwas intended. In addition, Poland, as a matter of long standing, has been de-
pendent -on -getting tungsten wire from the West for electric light bulbs. However,
CI.4 . still felt that tungsten was important, and he noted that such shipments released
other tungsten for strategic uses.
The Chairman suggested that the question of bloc shortage of tungsten wire be
held-in abeyance for the moment. He: assumed there was no disagreement that there
was no reason to instruct the USDEL to object in terms of the Note to Item 1668.
Views were expressed that the basic technical premise under which we had been work-
ing now seemed to require some modification. The Commerce member agreed to recuest
the neces-sary further analysis from the technicians.
The Chairman said that having agreed that the Netherlands case could be approved
under the Note to Item 1668, the next question was whether we should nevertheless
disapprove it because of the contribution it would make to the bloc's tungsten wire
supply. On this subject his own feeling was that we had cast the die when we ad-
mitted the possibility of exceptions under this Note. It seemed to him that it would
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come with poor grace from us now to say that since we could not disapprove this case
as an accident of definition, we were going to disapprove it because it made too
much of a contribution to bloc tungsten supply. He felt very strongly that we should
take our action on this basis of whether or not the shipment fitted the Note to
Item 1668. The Commerce member was willing to go along, but noted that'if exports
under the Note reached the point where it was felt that undue amounts were being
shipped and therefore in the over-all sense a relief to an undue extent was being
provided., we might raise the question of whether this loophole should be restricted..
The Chairman agreed, and thought it might be well to keep a running record of ex-
ceptions under this Note, also under the similar Note to the molybdenum wire defini-
tion. He added that any member should feel free to bring the matter before the Group
if he felt shipments under the Notes to these definitions were getting too high. The
Defense member reserved with respect to the recommendation in the Netherlands case.
3. 1957 List II Review - Problem of 3(d) procedure.
Ref. 1 5 2 F , 7 POLTO 1 2, 12 21
It was agreed (Defense member reserving but subsequently reporting concurrence)
that the USDEL would be instructed that it is the Washington view that he should in-
itiate no further-action either on the specific IL II items that have been ruled :#(d)
or on the general problem of the 3(d) procedure., pending evaluation of the responses
to the current high-level bilaterals. However, even if full evaluation of the re-
sponses to the bilaterals cannot be completed by February 1, Washington then will
consider again whether we should pursue the 3(d) matter in COCON. The USDEL would
be informed of our reasoning (para. III, A, 4, d of the Chairmanos List II report)
and advised that if this subject is brought up in COCOM by another PC., he is author-
ized to respond appropriately, drawing upon the kind of thinking on 3(d) described
in our high-level approach (CA-521S., 12/27/56).
The Chairman said he would forward his report on "COCOM Review of IL II Controls
for 1957" to the Chairman of the EC, with a cover note advising of the Group's agree-
ment as described above, and would suggest EDAC distribution of both.
Discussion
. The Chairmants report to the members on the COCOM Review of IL II Controls for
1957 was. distributed. The Commerce member suggested that it would also be appro..
priate to include in the report an assessment of the effectiveness of the.approach
the U0.Sa.had taken and a.description of the general posture taken by each of the
other countries in the negotiations. He thought such additions would be helpful.
both for the record and for our use in future negotiations.
The Chairman,. by way of background for his report, informed the Group that he
initially had intended to do only a summary, which would be either an ?DAC staff
memo to the Chairman of EDAC which could be distributed to EDAC for information and
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-8-
ref; ereenc e,, or a report from the Chai=rman of WG I. to the Chairman of the EC. Then
it had turned out that the general problem of 3(d) interpretation had to be dealt
with quickly (POLTO 1528), and the EC and EDAC Chairmen had told him that they
thought the Working Group should try to deal with this problem. Therefore he had
quickly put the report into the form of .a memorandum to-the Group, primarily to
provide a basis and recommendation for dealing with the general question of the 3(d)
rule, while at the same time providing a summary the Group could use for themselves
aril in briefing superiors. Re the suggestions the Commerce member had made, the
Chairman said he could make his own assessment of the effectiveness of the U. S.
approach, but others might make different assessments, and he did not wish to spend
tune= in the Group trying to achieve agreement on an assessment. As for the descrip-
tion of the approaches taken by the other countries, he noted that this had been
done last year but we had been dealing then with a more difficult situation. This
year our principal antagonists were the UK and, to a lesser extent, France, and
with a little more flexibility in our approach we probably could have settled our
differences with them. He asked that the Group direct its attention to the recom-
mendation made: on page 3 of his memorandum.- That the U. S. initiate no further
action either on the specific IL II items that have been ruled 3(d) or on the gen-
eral problem of the 3(d) procedure, pending evaluation of the responses to the cur-
rent high-level bilaterals".
The ICA member thought events of the recent past should not prevent us from. tak-
in the opportunity of strengthening the 3(d) rule, and he did not recognize this as
going counter to any over-all general policy decision which might have jelled in the
pat few weeks. He thought that the USDEL had recognized that we were overdue in
calling the attention of a few of the culprits in the use of the-3(d) rule to the
fact that they have not really followed the letter of the law. He thought it was en-
tirely compatible with our high-level approach for the USDEL to make a statement in
CO OM along the lines he had outlined. Moreover he thought this was a necessary
follow-through on statements we made during the List II Review..
The Commerce member advised that the reason he had found the Chairmants recommend-
at ion satisfactory was, in addition.to the rationale the Chairman had set forth. in
his memorandum,, that the current high-level approaches might have some significant
of fect on other PCs' comments in COCOM. If we proceeded in COCOM immediately, PCs'
comments might more reflect their past positions., without reflecting any impact, of
this latest bilateral. Therefore he suggested adding to the recommendation "provided
that such an evaluation can be made by February 1. Otherwise WG I will consider hav-
ing the USDEL proceed with comment without waiting for such an evaluation".
The Chairman, replying to the s tatement of the ICA member, pointed out that his
recommendation was not a proposal to drop the question of interpretation of the 3(d)
rule. What had been done, in effect, was that the U. S. had moved our approach on
3(d) up to a higher level, along with other trade control issues. What he was saying
now was that we should not 'raise the issue again in COCOM for the time being pe=nding
E;v'aluation of the responses. He was not reflecting any thinking that to persist on
the 3(d) issue would not be a good idea. He noted that when we get the responses to
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the high-Level bilaterals we may have to prepare for another CG soon; we may have
to reexamine this procedure and other procedures for that purpose. Review of the
COCOM principles and procedures was long overdue. Also, he thought that continuing
to hammer on this archaic 3(d) rule rather than trying to modify the .rule. was not
going to be very productive and might be contra-productive. He emphasized that he
thought an effort to. remodel the 3(d) procedure should be made when the time appears
propitious.
4. UK pad Hoc China Exception for Tires.
Ref o .FOLIO l .30~ 3 57, POLIO 1 ~6~ l/2/57.9 London Embtel 35189 13/31/56h
WG I D-O/i821.1)
The ICA member with the assistance of CIA,, Defense., and Commerce technicians,
would prepare technical/strategic argumentation to be forwarded to the USDEL pursuant
to his request in POLTO 1530.-
The Commerce member noted the following corrections which should be made in
WG I D-0/'1821.1- page 19 end of numbered para 2 9 instead of "(approx.3 ,000)"
$
insert "39315'; numbered para. 3(a) should reads "diameter sizes of 15 inches and
over are usually used for lowmpla.tform trucks and trailers which have 15-40 tires
per vehicle; and (b). . .'~
The Chairman noted that the U., S. had been virtually isolated in objecting . to
this case and the UK had strongly urged that we move beyond our confinement of the
discussion to the principle involved and discuss with them the strategic importance
of the tires.. The Chairman had origin-ally resisted that idea, but had changed his
opinion, largely on the basis that the USDEL had urged us to give him as much spe-
cific information as possible on the strategic uses of these tires. The documer
before the Group from the Commerce member would facilitate movement in this
direction. He. asked whether any member disagreed with the idea of sending the USDEL
as much strategic or substantive information as was possible on this case. No member
did.
Draft Instruction on Possible Licensing of Mercury to Poland by Italy.
ef0 Mr. Eastmangs Sta.te ECD draft of
Decision
The Group approved the changes proposed by the Commerce member in the draft,
instruction.
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6. Reconsideration of China Exception - UK Fused Aluminum Oxide Powder, 0/2375.
Ref. PCLTO 1107; WG I M?0,.item 7; WG I M-719 item 1; WG I M-7 9 Note h;
Commerce paper)
Decision
The Chairman recommended that the USDEL be authorized to withdraw the U. S.
objection to this case, on the basis of the information contained in the Technical
Task Group Repcr t. The State and ICA members agreed. The Commerce member objected,,
but stated he would not appeal, and reserved (subsequently reporting concurrence)
on whether the outgoing message could be shown as cleared by WG I. The Defense
member reserved (subsequently reporting concurrence).
Discussion
The Commerce member read a report he had received from the'Technical Task Group.
He reported that the-Task Group is not of the opinion that the proposed shipment is
an important quantity which will make a strategic contribution to the bloc. He
added that the concern in Commerce stems more from the fact that the UK itself manu-
factures very little of its total need. The UK imports some, not a large amount,,
from the U. S.; most of the UK material is obtained from other European countries,
for many of which the primary suppliers are subsidiaries of U. S. companies. These
are under. some regulation by FAC with respect to direct or indirect shipments to
China. PD 810 policy does not extend in its application to shipments made by sub-
sidiaries abroad. The position Commerce takes is that they would prefer to have the
objection maintained, but were in the unfortunate position of not having a basis on
whichsuch objection could be firmly supported.
The-State member advised that he would have supported an objection only if the
shipment contained the white oxide and if there were any real. question as to the FAC
regulations. He was satisfied on the white oxide point by the technical paper.. He
had discussed the FAC point with Treasury, and Treasury was quite sure that the UK
subsidiaries of U.. S. firms were so well briefed on the regulations that they would
not participate in such a shipment. Therefore he saw no reason to maintain the ob-
jection. The ICA member saw no basis on which to object;
The Defense member referred to the statement by the Defense representative at
the Group's meeting on December 5 and advised that he would have to reserve for the
time being.
The Chairman recognized the problem Commerce had, stemming from the 4 A rating,
but noted that he would find it hard to conclude that we should give this factor
controlling weight in view of the fact that the shipment involved only 24 tons and
in view of the conclusions of the Task Group report.
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Nylon Parachute Cloth - Item 1930.
Ref. WG I D-1930.3, 1/2/57)
Decision
It was agreed that the referenced document would be transmitted to the USDEL
for his use in responding to questions raised by the Japanese and German Delegations.
The Commerce member would notify the State member as to when the full review of the
item would be available so the USDEL could be notified in terms of scheduling dis-
cussion in the Subcommittee on Lists.
Distribution:
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ectAction M S do
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Froj idcy VW 4O 1
metre a 29 4an 1957
EDXC/IR-27, "Sinnoo,-Soviet Moe Meresha t Shipping Requirer`ien s avd
Capabilities, :1956 throWia 1963"
x ~ L< s EIO (via EDIC )
'