COORDINATING COMMITTEE RECORD OF DISCUSSION ON ORAL REPORT BY THE CHAIRMAN OF THE SUB-COMMITTEE ON EXPORT CONTROLS REGARDING THE SUB-COMMITTEE'S MEETINGS ON THE 19TH, 20TH, 21TH, AND 22ND, MAY 1959.4TH JUNE, 1959

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00647A000100180042-7
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 8
• Document Creation Date: November 9, 2016
• Document Release Date: September 10, 1998
• Sequence Number: 42
• Publication Date: June 18, 1959
• Content Type: MIN

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16th June~
COORDINATING COTS MITTEE
RECORD OF DISCUSSION
ON
ORAL REPORT BY TIDE CHAIRMAN OF THE SUB-CO1X-.,1IT1'EE ON
EXPORT CONTROLS REGARDING Ti SUB-C01MITTEE'S LEETINGS
ON THE 19th 20th, 21st and 22ndjIay, 1959.
t4 h June, 1959
Present: Belgium(Luxembourg), Canada, Denmark, France, Germany, Greece, Italy.
Japan, Netherlands, Turkey, United Kingdom, United States.
References: 0000 Documents 9.1.6.6, 3195.12: 3340.8, 3468, 3486, 3518, 3519,
3528, 3530, 3531, 3532, COCOK Sub-C(59)1, COCOM Secretariat Nos?
103 and 105-
1. The CHAIRMAN welcomed the Chairman of the Sub-Committee on Export
Controls, who was present in order to submit an oral report on the meetings
held in Rome under his Chairmanship from the 19th to the 22nd May. Apart from
the interest which was always inherent in such reports, providing as they did
a summary of the debates and of their conclusions, the report which Monsieur
Blondiau was about to submit would indicate the value of the first experiment
of holding a meeting of the Sub-Committee elsewhere than in Paris. It was
obvious that Monsieur Blondiau's opinion on this question would help the autho-
rities in the various participating countries to judge the value of renewing
this experiment.
2. The CHAIRMAN of the SUB-COL=TTEE stated that in making his oral
report he would follow the order of the Sub-Committee's agenda.
3. The approval of the agenda had given rise to an exchange of views
regarding point 7(a), which dealt with a German suggestion for the setting up
of a working group composed of officials of control services who would study
the problems arising in connection with the interpretation of the International
Lists and of the Administrative Principles. The French Delegation considered
that as this question had a political aspect it did not lie within the Sub-
Committee's terms of reference, but rather in the domain of the Coordinating
Committee. The German Delegation pointed out that his proposal was only in-
tended to facilitate an exchange of views between officials responsible for
applying the controls. After the Chairman had undertaken to see that the poli.-
tical aspect of the matter would not be touched upon, the SUB-COI.:IITTEE had
approved the agenda as set out in COCOM Document 3486-
4. There had boon no special remarks regarding the Chairman's report
on the Sub-Committee's previous meeting (COCOM Sub-C(59)1)-
Item Ddveroions
5. Item a : In accordance with a proposal by the United States Dele-
gation, the study of the diversion cases would make it possible (a) to single
out cases where closer cooperation between participating countries would have
helped to avoid a diversion and (b) to have a better idea of the manner in
which frauds were carried out (itineraries and methods).
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6. Item b
(i) The Sub-Committee had then examined the case summarised in COCOM
Document 3468, concerning the export from Turkey to Greece of
6,700 tons of boracite. The Turkish Delegation had indicated that
their authorities had issued an export licence against an import
certificate issued by the Bank of Greece and bearing the number
1225. On the 5th March 1959 the Greek vessel "Martha" had loaded
the 6,704 tons of boracite and had left Turkey on the 11th March.
The Turkish authorities had subsequently been informed by tole-
gram of the fraudulent nature of the transaction. It was to be
noted moreover that it had been impossible to trace the exact ad-
dress of the Greek importer. Upon receipt of this telegram the
Turkish authorities had got into touch with the Greek authorities.,
as the shipment had been paid for f.o.b. by the Greek importer, the.
goods belonged to the latter. The Greek Delegation in their turn
had provided the following details: the 6,700 tons of boracite -
volved had been intended at the outset for delivery Yugoslavia.
The following conditions had at that time been stipulated for the
issue of an import certificate: (a) a credit was to be opened in
Yugoslavia, (b) the exporter was to provide a Yugoslav import cer-
tificate, (c) a iO0/o guarantee was to be paid and a document certi-
fying the arrival of the goods in Yugoslavia was to be submitted
within two months. The Greek trader had been unable to comply with
these conditions. When the Greek Government had been informed that
the boracite consigned to Greece was in fact on the way to the
Soviet Bloc, they had ordered the ship to return to port at the
Piraeus. The action taken by the Greek authorities had boon f or-
ciblo and had involved serious risks because the injured parties
might claim damages in Court. Since the seizure of the goods, the
Greek legal authorities had been preparing this case. The Delegate
had stated furthermore that payment had been made to the Turkish
exporter in dollars and not within the normal framework of the
Greco-Turkish clearing arrangements. In this connection the
Chairman pointed out that as Greece had not at the present time li-
berated their payments, it was necessary to act with circumspection
before issuing an export licence. The Chairman concluded the dis-
cussion of this case by noting that the diversion had boon prevented
thanks to close cooperation between Member Governments and that the
Greek and Turkish Governments were to be commended for the prompt
and effective measures which they had taken once the attempted di-
version had been discovered. 'Nov; however that the boracite had been
unloaded in Greece, all necessary precautionary measures should be
taken to assure that the material should be finally disposed of in
conformity with the Corulittee f s agreed procedures and to an approved
ultimate destination. The Greek Government would certainly have the
full cooperation of all Member Governments in this connection.
There should also be emphasised the importance of continued coope-
ration between Member Governments, not only in this case where only
participating countries were involved, but also in other cases, par
titularly those involving large shipments of strategic commodities
to non-member countries.
(ii) The Sub-Committee next studied the memorandum in which the United
States Delegation had referred in general terms to the question of
the diversion of Argentine borax (COCO1I Document 3528). In this
paper the United States Delegation had stated that they ondeavoured
to keep currently informed on the development of now strategic mi-
neral resources in underdeveloped countries and tried to secure Tthe
he
cooperation of countries interested in the control of exports.
operation described in COCO :i Document 3528 had boon carried out in
the following manner: an export licence for 1,000 tons of borax had
boon issued for despatch to the Netherlands. The goods had been
loaded in January and in April 1958 on board a Polish vessel osten-
sibly destined to the Netherlands but actually destined for Gdynia
and thence to Communist China. As far as payment was concerned, a
Belgian fire had opened a revolving latter of credit in favour of a
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Liechtenstein firm. All these precautions had had to be taken by
the traders because at the time Argentina was rc-examining her sys-
tem of controls to the Sine-Soviet Bloc and had temporarily sus-
pondod the issue of export licences for that area. With regard to
Argentine borax, the German Delegation had pointed out that autho-
rities in participating countries wore not able to act in cases of
transit via a Free World port when the item was to be delivered to
a Communist country. For this reason all Delegations had considered
that it would be expedient to secure the direct or indirect parti-
cipation of Argentina in the TAC scheme. The Chairman added that in
order to intervene in cases of transit of Argentine borax, the
administrative authorities in pax ticipating countries would need to.
be able to quote a legal text. The United States Delegation had
pointed out that Argentina was already taking part in the IC/DV sys-
tem and had undertaken not to sell borax products to countries in
the Sino-Soviet Bloc. It had not been possible as yet, however, to
secure Argentina's participation in the TAC scheme. The United
States Delegate considered nevertheless that the controls now insti-
tuted by Argentina over her exports of borax wore adequate to prevent
illegal diversions. As this case involved a firm in Liechtensteinf
the French Delegation had asked for information as to the present
system for controlling the export of strategic items to that country.
The Chairman considered that it would be advisable to adopt a very
prudent attitude in the event of the supply of large quantities of
strategic items to that small country.
(iii) The Sub-Committee had then studied the memorandum submitted by the
United Kingdom Delegation concerning an illegal despatch of roller
bearings covered by Item 1601 (C0C0M 3531). It was stated in this
memorandum that the United Kingdom authorities had delivered an
Import Certificate for the import of the bearings involved and that
this I.C. bore a triangle as the bearings were to be sent to
Switzerland. The United Kingdom trader having applied for a
"waiver" licence permitting him to dispose of the goods without
importation into the United Kingdom and to have them sent to
Switzerland via Rotterdam, the United Kingdom authorities had had
certain doubts and had asked for a Swiss I.C. beforehand. As this
had not been obtainable, no "waiver" licence had been issued. As
to the original United Kingdom I.C., this could not be recovered
from Italy. It was found subsequently that this document had been
communicated to United States exporters and that on the strength of
this the United States authorities had erroneously issued an export
licence. The goods had been exported to Naples, then roconsigned
to Rotterdam and from there sent to China. Proceedings had boon
taken against the United Kingdom firm. The Chairman pointed out in
respect of this case that normally the Swiss I.C. should have boon
required before the issue of a United Kingdom I.C. bearing a tri-
angle.
7. Item c : Turning to the study of possible loopholes in the case
of transactions involving third countries, the Sub-Committee had examined the
United Kingdom memorandum (C0C0M 3530) concerning the United Kingdom's expe-
riences in their commercial relations with Yugoslavia. It appeared that the
guarantees afforded by the text of the Certificates issued by the Yugoslav
Federal Chamber of Foreign Trade left much to be desired. Moreover, copies of
I.C.s did not invariably emanate from that Chamber; lastly, certain participa-
ting countries received End-Use Certificates, and others not. The United States
Delegate had said that his authorities were continuing their negotiations with
the Yugoslav authorities in order to clarify the situation. The Coordinating
Committee would be informed of the results of these approaches. With reference
to Sweden, the Gorman Delegate had confirmed that the Swedish customs arrival
documents called "Tullsedol" wore completely valid. As regards Austria, the
Gorman Delegate had stated that his authorities were experiencing doubts as to
the and-use of certain strategic consignments exported to that country within
the framework of the IC/DV system and after compliance with the formalities
required by that system. It appeared that Austria was carrying out strategic
deliveries to countries in the Soviet Bloc under the provisions of existing
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treaties, The Chairman of the Sub-Committee recommended that for the Sub-
Cormiittee's next session the problem be reviewed from its origin.
8. Item 3(d); The Sub-~Coru:littoo had then turned to the question of
the exchange of information between Delegations regarding East-West traders
involved in the despatch of otratogic items to the Sino-Soviot Bloc. On this
subject the United States Delegation had prepared a document (Secretariat
Paper No. 105) in which the anonymity of the firms involved had boon respected
This question had given rise to a lengthy debate, in the course of which the
German Delegation had stated that they wore in favour of maintaining anonymity:
the United Itingdori Delegate had expressed himself in favour of the drawing up
of an observation list containing the names of firms trading with Sino-Soviet
Bloc countries, and had stated that he would have no objection to exchanges
of information concerning those firms, The French Delegate had emphasised that
in that event it would be useful if the exchanges of information could be reci-
procal and if the firms named in such lists could be deleted therefrom after
}_'ending their ways, Horaover, each Government should be informed of the reasons
for which a firm in their country had boon placed on a list of this nature
,drawn up by another participating country. The Chairman had concluded that this
question lay outside the Sub-Committee's terms of reference and that it would be
for the Coordinating Committee to examine it if it was thought fit. He sug-
gested that a document be eubuitted by the United Kingdom or United States
Delegations in order to prepare the discussions on this riattor and he expressed
his personal opinion that the subject of discussion might be separated into two
.parts: (a) possible communication of the names of firms domiciled in participa-
ting countries and (b) possible communication of the names of firms domiciled
in non-participating countries.
Item .
9. Itcrsi a1: In carrying out the review of existing procedures, the
Sub-Committee had first dealt with the IC/DV procedure and more especially with
the question of the return of unused I.C.s to the authorities having issued
them. The German Delegation had put forward the following proposal: when an
export licence intended to permit the despatch of strategic goods from one
}aembor country to another member country was refused, it would be advisable
that the country having issued the I.C. should be advised of this refusal. Two
solutions would be possible: (i) the I.C. would be returned through official
channels by the country having refused the export licence, (ii) the I.C. would
be handed to the individual concerned, but the importing country would be
advised of the refusal of the request for an export licence. They could thus
recuperate the I.C. which had become useless. This proposal had been adopted
and would be put into effect.
10. After examining the question of the despatch to cooperating third
countries of duplicates of I.C.s, the Sub-Committee had agreed, following a
suggestion by the French and German Delegates, to recommend to the Coordinating
Committee that a standard letter be drafted to serve as a cover note to be used
by all countries sending duplicates of I.C.s to third countries in order to
explain the reasons for its despatch. The Sub-Committee had moreover agreed
that each Delegation would inform the Secretariat as to the third countries
to which their Gov,:rnmont services sent duplicates.
11. Item 4(a) (3) had not given rise to any serious problems.
12. When studying the question of the procedure to be followed in the
case of the despatch of embargoed goods to State organisations of member coun-
tries, the Sub-Committee had noted that it would be desirable to reach agreement
as to the definition of the term "State Org_,nisation". A note on this subject
had boon submitted by the United States Delegation. The problem was proposed
for study by the Coordinating Coruaittee, which might possibly establish rules
to be applied uniform'y to such State organisations. The Chairman pointed out
in this connection that there existed a procedure providing for derogations
from the requirement of I. C. s in cases of export to State organisations of
member countries (See COCOM Doc. 946, para. 6).
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13. With reference to the exchange of the IC/DV forms now in use, the
Sub-Coma :ittee had agreed that Delegations would send the Secretariat specimens
of those documents.
14? In considering the possible changes to be made in the IC/DV system,
the Sub-Committee had oxmainod two proposals by the German Delegation intended
to simplify the procedure: (a) the issuance of I.C.s valid for six months or
oven a year, covering large quantities of goods; these I.C.s would only be
issued to companies of established reputation; (b) the compilation of collec-
tions of documents assembling all the papers relating to a given transaction.
This last proposal could not be studied and the Gorman Delegation had stated
that they might submit a iaci::ora clura on the subject.
15? The Sub-Committee had examined the problems exising as the result
of an inadequate description o: the goods, a question which had been dealt
with in a memorandum by the United States Delegation (COCOM Document 3518). In
order to remedy the difficulties referred to, the Sub-Cormmittee had recommended
that when the services of an exporting country called for an I.C., they should
inforu the applicant exporter of the number of the International List item
covering the goods concerned.
16. Item b): The Sub-Committee had undertaken the study of the TAC
scheme. They had noted that the Turkish reply to the questionnaire (COCOM
Document 3195.12) did not call for spocific comment.
1.7. As regards the statistics concerning transit of goods coming from
Sweden or Switzerland, the Belgian Delegation had supplied details of their
statistics for 1958.
18. On the question of the application of the TAC scheme in cases
where a resident of a participating country acted as a principal in a transac-
t.on, the Sub-Committee had had at their disposal a memorandum by the United
States Delegation (COCOL Document 3519) which it was agreed to study afresh
during the following session.
1. Confirming the interest attaching to the exchange of TAC forms
botweon participating countries, the Sub-Comanittee had agreed that each Dele-
gation would send to the Secretariat an adequate supply of TAC forms as spoci-
rions to be distributed to member countries.
20. The Chairman asked leave to revert to the present situation re-
garding Austria and Switzerland. After reminding the Committee of the German
Pplogate's statement as to diversions carried out from Austria even after the
issuance of Austrian I.C.s and D.V.s, he stressod novortholess that Austria
genuinely participated in the IC/DV system and had asked for a great number of
1.C.s from member countries. The steps taken by the United States Government
to obtain the collaboration of the Austrian authorities in the TAC scheme had
not been successful so fox and it must be noted that, because of the treaty
binding Austria to the U.S.S.R., the former was not always in a position to
refuse an export or prevent a transit. As to Switzerland, the incomplete par-
ticipation of that country in the TAC scheme constituted a loophole in the
control system. The only solution would be to persuade that country to control
their transit to the Eastern countries. The United States Delegate had indi-
cated that the Swiss authorities had agreed to watch transit of items on the
Atomic Energy List and the i:lunitions List. The United States Government was
now trying to obtain a similar undertaking for List I items. The Sub-Committee
recommended that the Coordinating Committee should ondeavour to find the best
solution for the dangerous situations existing both in Austria and in Switzer-
land owing to the incomplete participation of these countries in the control
procedures. In conclusion, it could be considered that, save for the loopholes
which had been mentioned, and which involved non-member countries, the IC/DV
and TAC systems retained their full value and were efficacious. The Sub-
Comn,ittee had drawn the necessary conclusions from their study of the existing
loopholes.
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a 5.
21. The Sub-Committee, noting that the bringing up to date of the
Commodity Identification Manual was now half-finished, thanked the United States
Delegation and stressed the importance of this publication. Each Delegation
would study the document and would if necessary transmit their observations
direct to the United States Delegation.
Item 6.
22. It had become clear that in most of the participating countries the
Lists now in force, including the Atomic Energy Lists had been published or wore
about to be. It had nevertheless been pointed out that certain practical dif-
ficulties arose because the Committee made successive amendments at dates close
to one another and because some of those cancelled or altered the decisions
previously recorded. In certain countries the anoneaionts were not published
irir.:ediatoly; nevertheless, the decisions of the Coordinating Committee wore
applied as from the official date on which they came into force. It was never-
theless recommended that participating countries take steps to ensure the
,publication of amendments within a reasonable period (on a quarterly basis, for
example).- It seemed to follow from those remarks that the amendments to be
inserted in the correction shoots ought to be grouped together as much as
possible. To ensure uniformity in this respect and to place at the disposal
of participating countries full information as to the systems applied by their
partners, the Sub-Committee had agreed that each Delegation would send the
Secretariat7curront inventory of their publications regarding the Lists, star-
ting from the 15th Aug,zst 1958. This inventory would be kept up to date. Each
country would send the Socretariat a note referring to the official document
publishing one or several amendments to the Lists; on this basis a general
iocumont would be compiled in the Secretariat and communicated to Member
Governments. Lastly, a copy of each publication would be deposited with the
Pecrotariat, who would be responsible for filing thou: this documentation
would be at the disposal of Delegations. It was understood that these proposals
would not be retroactive, but would come into force at once.
!ten 7.
3. The German Delegation had proposed the setting up of a working
group composed cf officials of control departments who would study inter alia
,the problems arising out of the interpretation of the Lists and of the Adiinis-
trativo Principles and the treatment to be given to non-specialised parts. This
roposal, which had boon supported by the Italian Delegation, had nevertheless
Oncounterod opposition from the French Delegation, who considered that in view
of the complexity of the problems of interpretation, this was a matter to be
dealt with by the Coordinating Committee. The United States Delegation asso-
ciatod themselves with the French position, for While considering the contacts
between officials responsible for applying; the controls to be useful and fruit-
ful, they felt that interpretation questions should be submitted to the
Coordinating Committee. The Chairman for his part considered that the setting
up of a group of exports would trespass upon the Coordinating Cozuaittoors pre-
rogatives. He nevertheless looked with favour upon the pos::ibility of consul-
tations between colleagues in different countries in written form and on spoci-
fic points. The Chairman proposed that the discussion of this proposal should
be resumed at Coordinating Committee lovel.
24. The Sub-Committeo had then examined a question raised by the United
Kingdom Delegation in COCOM Doc. 3532 concerning export control of non-spocia-
lised parts of oscilloscopes which could be combined to form a complete equipment
subject to embargo. From the exchange of views which ensued on this point, it
appeared that in order to solve this problem the United Kingdom might have to
amend their control regulations and in this connexion the Chairman recommended
that licensing services should be particularly careful to avoid the export to
the Soviet Bloc of parts intended in fact to be assembled so as to form
equipment subject to embargo.
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Item 8.
.25. The Sub-Cormittee had studied the statistical returns for secondary
control submitted by Dependent Overseas Territories of member countries; they
had concluled that the rules laid down by the Coordinating Committee wore bein;,applied in the Dependent Overseas Territories, although there might be some
delay in the transaission of statistical returns from these countries since
they were based on actual exhorts and not on licences issued.
Item 9.
?6. From the stuOZr of the statistical returns for I.C.s issued by
oombor countries during the first half of 1958 for imports from non-member
pountries and Dependent Overseas Territories of member countries, it was
apparent that those countries cooperate:? in the IC/DV systom.to an appreciable
extent. The Sub-Committee considered that, until otherwise decided, there was
no further need to ask member Govornments to supl)ly statistical returns for
.Cs and DVs issued or received by their services.
i ten 10.
27? Referring to Secretariat Paper No. 103 which listed for third
pountries and Dependent Overseas Territories the addresses of the services
responsible for applying; the control procedures, the Chairman thanked Doleg;ar-
tions and the Secretariat for the considerable trouble they had taken to compile
this document. It might be useful to prepare a similar document giving the
addresses of all the competent services in participating countries. This
.titter might be examined later on after Greece and Portugal had submitted the
exact addresses of their official services.
It,~ call.
28. The Sub-Committee had agreed to schedule its next meeting for
I ovembor 1959?
Item 12.
9. The members of the Sub-Committee had been enabled to visit the
customs services at the Ciarilpino Airport and in the port of Naples; these visits
had been exceedingly instructive and had enabled the Delegates to compare the
local methods with those in force in their cm countries.
30. Having thus concluded his report on the work accomplished, the
Chairmm of the Sub-Committee, speaking personally, stated that he had received
a very favourable impression from this first session hold elsewhere than in
Paris. The attendance at the meetings had not been affected by this displace-
ment and the Chairman wished to thank all Dele;ations, and the Secretariat. for
their cooperation. Emphasising the faultless organisation and the harmonious
pourse of the work, the Chairman expressed his warmest thanks to the Italian
authorities and to the Italian Permanent Delegate to the Coordinating Commitseep
31. The GEREAN Delegate repeated his thanks (already expressed at the
close of the Sub-Comrlittoo's session) to the Italian authorities and to the
Italian Delegate to the Coordinating Committee, for the cordial welcome ox-
tended to the Sub-Committee. He also wished to congratulate Monsieur Blondiau
for presiding over the Su':-Committee's work with such patience, objectivity
and accuracy, and to thank the members of the Secretariat for their effective
cooperation.
32. The FRENCH Delegate in his turn reiterated the gratitude he had
already expressed to the Italian Delegate for the impeccable organisation of the
conference and the exceptional hospitality extended to the Sub-Committee by the
Italian authorities. The Delegate congratulated Monsieur Blondiau for the
clarity of his report which accurately reflected the quality of his Chairra,Phi.p.
He als-o wished to express hid appreciation of the task accomplished by the
Members of the Secretariat.
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33. The UNITED STATES Delegate also congratulated Monsieur Blondiau
for the precision and objectivity of his report. Emphasising how useful it
was to the Sub-Committee to hold meetings outside Paris in order to study the
putting; into effect of the controls on the spot, the Delegate wished to express
to the Italian Government and to their representative in the Committee his
Delogationts gratitude for the truly exceptional quality of the welcome
oxtendod to the Sub-Committee and for the organisation of its work. This work
had been extremely fruitful and the cr-dit for this was largely due to the
Phairman, who had been helped efficiently by the Secretariat.
~4. The ITALILN Delegate stated that his authorities had been happy to
'1e able to itolcomo the riei_,bers of the Sub-Committee and to offer them the
possibility of comparing the working of the control system in the different
participating countries. The Italian authorities would be keenly interested to
hear the observations suggested to Delo4;ations by the visits they had been
able to make to the various control departments. The Delegate stated that he
had greatly appreciated the clarity anc. the exhaustive nature of Monsieur
$3londiau t s report: he wished to thank him once for the task he had
accomplished in presiding over this session. He stated in conclusion that he
had much appreciated the tributes paid by Delegations to his authorities, to
whom he would not fail to transmit them.
35. The CHLIRM N, in the naLaa of the whole Committee, again expressed
to Monsieur Blondiau the thanks and congratulations which wore his due. He
noted that the Delegations who had asked for the floor during the present
mooting seemed to bo unanir.:ous in considering that the .:r_i_nciplo of convening
the Export Controls Su:>-Committee to moot in different capitals was useful and
Well-founded. In conclusion he pointed out that it would now be for the
Coordinating Committee to proceed with the study of the questions which had
b.ocn expressly referred to it by the Sub-Committee. He reserved the right to
?peak in greater detail on this point at the next meeting.
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