POLITICAL IMPACT OF FREE WORLD CONTROLS ON TRADE WITH THE SINO-SOVIET BLOC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP63-00084A000100200009-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 12, 2016
• Document Release Date: July 22, 2002
• Sequence Number: 9
• Publication Date: June 17, 1955
• Content Type: STUDY

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CFEP DRAFTING GROUP
ECONOMIC DEFENSE POLICY REVIEW
Staff Study No. 20
Draft of June 17, 1955
Political Impact of Free World Controls on
Trade with the Sino-Soviet Bloc
This draft of Staff Study No. 20, "Political Impact of
Free World Controls on Trade with the Sinn-Soviet Bloc", is trans-
mitted for your use in connection with the work of the CFEP
Drafting Group on Economic Defense Policy Review.
In compliance with the request of the Chairman of the
Drafting Group, the Executive Secretary, EDAC, is providing re-
production and distribution facilities as a service to further
the work of the CFEP Drafting Group.
Irving I. Kramer
Executive Secretary
Distribution:
CFEP Drafting Group
State Dept., OSD reviews completed
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CFZP DRAFTING GROUP
Staff Study No. 20
Draft of June 17,1455'
Contributed by Defense
ECONOMIC DEFENSE POLICY REVIEW
Political Impact of Free World Controls on
Trade wiza the lino o e c
CONCLUSIONS
1. Examination of the. indications from available intelligence provides
strong support for the view that Free World controls on trade with the Sino-
Soviet Bloc
(a) have a broad political impact upon the foreign relations of the
Bloc;
(b) represent a lesser threat to the internal political stability of the
Bloc regimes, which however could be considerably increased by total embargo;
(c) at their present level or at a higher level constitute major Free
World bargaining points in negotiations with the Bloc;l/ and
(d) at a lower level, particularly CHINCOS[ controls would be a sign of
a' wealmess and might hamper political discussions and negotiations:.g/
B. US RLYING CONSIDERATIONS
2. In an examination at this time of the effects of Western trade controls on
countries of the Sino-Soviet Bloc, it is assumed that despite apparent conces-
aions recently made by the Soviet rulers,, (a) there is no convincing evidence
Trade controls as a diplomatic device contain sanctions which can be
applied entirely at the discretion of Free World governments both as
to timing and extent.
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at tho ideological force of Communism is abating, (b) the fundamental hostility
of the Communist leaders toward the Free World remains unchanged, and (c) the
basic objective of the Communist leaders is a continued expansion of their own
sphere of power at the expense of the Free World,
3. The political structure of the Sino-Soviet Bloc is vulnerable to
the impact of Free World economic measures because Marxist political think-
ing is conditioned by economic considerations.
4. The total political impact of Free World denial of goods and
services to the Sino-Soviet Bloc involves effects of economic and mili-
tary measures which are not here assessed. Although the political sig-
nificance of this impact may be greater or less at any given time, the
Ftee World controls constitute an effective overall bargaining instrument
in negotiations with the Sino-Soviet Bloc and produce disruptive intra-
Bloc political effects of an ideological and psychological character from
which tactical advantages can be derived. For these reasons the correct
assessment of the political impact of trade controls is a vital factor
in the formulation or revision of an economic defense program aimed at the
preservation of Free World security.
g. It is a premise of the Free World controls that they impose a
greater strategic cost on the Sino-Soviet Bloc than on the Free World./
By parity of.,reasoning, any increase of the level of controls would increase
the relative strategic cost to the Sino-Soviet Bloc, and the max mm
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6. Although the system of Free World controls has been based pri-
marily on the idea of selectivity, the trend in the recent past in the
main has been toward selecting items for decontrol rather than toward
selecting items which would have a major strategic impact if denied to
the Bloc. For example, in the context of current Soviet Bloc economic
conditions, it might be that agricultural ti ould be near the
top of the list from the point of visa strategi impact. Another impo
tart area of direct vulnerability is the provision of shipping and
shipping services to the Bloc (shipbuilding and repairs for Bloc accounts
in Western yards), chartering of ships in trade with the*Bloc, etc.-
'POLITICAL STABILITY OF T} SINO-SOVIST BLOC
. .The system of Free World controls on trade with the Sino-Soviet
Bloc represents a continuing challenge to the political stability of the
Bloc regimes. The controls -
(a) compel the Bloc to try to compensate by autarchic measures in
those particular areas where Free World denial of goods and services is
effective;
(b) disrupt Soviet state planning;
(c) contribute to the failure of the Bloc to benefit from Free
World advances in broad fields of science and technology;
(d) restrict the flexibility and possibly influence the basic
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pattern of the development of the Bloats mobilization base! and even
influence military decisions as in the case of Communist China.2j
8. As regards relationships between the various member states
of the Bloc, Free World controls tend to -
(a) maximize strains, stresses and consequent chances for dis-
unity by compelling the institution of priorities for the allocation
of scarce goods and services on the basis of Bloc-wide strategic requi
menus decided by moscow; LO/
(b) cause the European satellites to be turned by Moscow from tra-
ditions! Free World markets in order to satisfq overriding internal'
requirements of the Bloc as a whole or of specific Bloc partners;
(c) require policing efforts among Bloc partners to-insure compliance
? with infra-Bloc priority allocation systems made necessary by Free
World controls; 12/
(d) encourage satellite countries to reestablish normal relations
with the Free Wor3.d.l3~
D. SNT!RNATIONAL'RELATIONS BETWEEN SING-SOVIET BLOC AND FREE WORlD COUNTRIES
9. In international relations between Sino-Soviet Bloc countries
and the Free World, strategic trade controls:
(a) limit the Sino-Soviet Bloc's freedom of action under peacetime 7
conditions and in preparation for war; A/
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(b) constitute a major bargaining point for Free World negotiators,
particularly for negotiations involving economic requirements or the
political prestige of Communist China;
(c) call attention to the advantages of a free exchange of goods
and persons enjoyed by non-Communist countries (see 8.(d) above); L6/
(d) emphasize the decreasing dependence of Free World economies-'
upon trade with the Bloc.l?
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