BRITISH CONSIDERATIONS OF THE REDUCTION OF EAST-WEST TRADE CONTROLS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00014A000100250005-0
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: September 6, 2012
• Sequence Number: 5
• Publication Date: September 26, 1955
• Content Type: MEMO

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1ORANDUM OF CONVERSATION
British Considerations of the Reduction of
East-West Trade Controls.
PARTICIPANTSg 0. Wheeler, C.B., Under Secretary,
H' f Gresswell., C.B.E., Assistant Secretary
t Ministry of Defence
Allan Edden, Head, MPxtual Aid Department
Foreign Office
Admiral W. S. DeLany, Deputy Director
Mutual Defense Assistance Control
Robert W. Barnett, Regional Affairs Office
Department of State
Edwin G. Moline, Acting Deputy to the Minister
for Economic Affairs,
Amer is an Embassy, London
The meeting was in response to British initiative for some bilateral
discussiona of'East-West trade matters, taking advantage of the oppor-
tunity of the visit to London of Admiral DeLany and Mr. Barnett. This is
a summary report of the British view3 expressed at the meeting.
After initial pleasantries9 Mr. Wheeler said that he had particularly
wanted an opportunity to talk with responsible U.S. officials regarding
East-West trade matters because the British had under review at the present
time the question of a modification of the existing lists in the light of
the concepts which were now dominating a great deal of the military plan-
ning. Prior to the French initiative to call a CG meeting, the British
independently had been considering the meaningfulness of the present
control lists drawn up as they were initially against the concepts of
long-drawn-out warfare of attrition on a global scale. Now.adays,. when
t,ft$ military recognized the devastating power of thereto-.nuclear weapons
and planned in terms of wars of short duration and nearly total destruc-
tion of industrial objectives with the initial attack and retaliation, the
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once in 'terms oL w(a t;u-LtA6 uiiv- uv.: a a v, -:---
withconventional conventional-eapons,9 it was hard to rebut the Case that~rthe_prese
WL1ai1' 1i'4 Fla ~.~i.vtiaw.a., ;.......... . - .. ~,~,.?,.t
i;,,4?;"?+: +hat, the nneesnt controls were of very limited marginal;.. impo ,t
a -drawn-out war on his global scale, seemed to?'Have even r:Ie+ss ;puxpos? a
fiin the build-up cif the i.ndustrial:base eoess_ ,t snppovt
1 d at limitinir the a~:qui ition Uf oonven o e pons
;s were of '.even less a .gni2lCance agalna Wit; 11Gw, .,..aav.+i.
Ali-l.; Jj-
I edition -te +his reexamination which the British ha under way''
e y
global scale, it would be, the British view on the basis of its new concept
th abilit of the Bloc to conventional war for a long period on a
+si +:n..v +tArk of , the ' same sort from the West. Where au item was in
o w e e
readiness of a potential aggressor to, launchian attack".yith,; thermos-nuclear
o
te$ting the -"s ing , .
th r their continued control would significantly'im t the initial
the British military were, in terms of strictly defense regai,remens,
f 3ndivid1a1 commodities against the.consideration
4
n
it might be noted that in place or the present criteria or g
r
r
States in another e
As a general indication of the conclusions towards which they were moving
f listi
items
faun" weeks about the outcome. of, their studies.
o
th
par p
negotiations with the U.S.S.R. It was thought, however., that the Btitish
1 _~iL ice., TT-44.-A
gent in the control lists., as the matter had not been fully considered by
the Ministers. In the meantime,. the British would stand upon the tri-
tite re-Surmdt agreement on handling strategic trade controls in
s of business
to export more, and the fact that some individual segmen
failed to enjoy the general prosperity of the country.
It was too early to say what changes the British would have to sug-
res o..
mentary pressure reflecting the opinion of the public in several consti-
tuencies, motivated both by. the public reaction to'-the better atmosphere
following the Geneva talks., reaction to the exhortation of the Government
t
y
and to bring China controls down to the level of ose pp g
t s the Soviet Bloc. This pressure was to a large extent Parlia-
er
y
fronted with great.domestic pressure both to relax controls gen
in to the
th a l
because of the stage WnlCn Lneli- -11 --ow L-*- -~ .---
all
' ?' n x?0,,.?1 rmi oAAa the CG meeting (which the British, found premature
that such an item should no longer be retained.
The British were asked whether they recognized the possibility of
z
e
ia
Korean pattern., or alternatively the possibility that the threat of thermo-
A locali ad wars being fought with conventional weapons, say on the
it
1i
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specialized as to be useful only for producing such weapons or ammunition,
Here was no reason wby conventional weapons. should be controlled.. None
theless, the British would not propose, in iii,lObentation'of their new
concept., to remove conventional weapons from-tbe, list, or machinery so
capacity. Some British opinion held this vier so strongly that it felt,
optimistic appraisal, had lead aaq too.: etz.ctin 3 viq ~ t - :
Bloc., had adequate capacity and stocks, of o.pmr o ;,, qpna so ae Ito
affect Bloc capacity to wage such wars. In the British view, the Sovie
reasons for maintaining controls over the types of things which might
recognized such possibilities they did not seem to provide sufficient
,
war to be? ouBht with conventional weapons. -W:
.. They replied that while they,
such weapons in the category of gas. in the last war
, leaving the global
nuclear destruction might be mutually regarded as ~n,real as to place
V4_ .L U LO ulcvr~;7vra41rlg aavanced all.i1' ary IMOr-ndr.
In response to another question, the Britisf eaid they were prepared,
as indicated above, to hold to the tripartite position previously agreed
in July with regard to the present East-West trade controls for the ;Foreign
Ministers,' talk in Geneva. Even if they had not.wiahed to do so, they would
not have been in a position to advance their nev~Adeae bythe time of that
meeting. `
#'ar +&a" Jta Taped pg Chii a iadneti^ial al omen or. aer3l tar r ,potenUl
was concerned. The Britishr contend that ii - o fi c !'ferenti.a iteas
vere -kEad'which were thought to be immediately useful in the prosecu-
tion of the Korean War but this excuse e .a
g v ici since the hot
x~ws noawt ?ar t > war had been C' onlu9 n ~~ ? .arced further that perpetua-
tion of the M&A ' ' #rp. ..a $!Q :.of
the Russians.
acquifred -at an additional""F61it7rfiio'h"wae '-bf Iita rea algiifoanee on
g
diff6rent e, uben ,the ;N,41t1...m34 ct it be 'btained through
Eastern-Europe if they were essential, to the Chinq~e econo, it}d be
m8
a #it _S-. Qne. list., oaba
e entire MOOT In making their pre-
sentation on the point, however, they stressed the iupossibil3ty of their
continuing to maintain in Parliament that there was anyrlogia in keepin
Mr. Wheeler spoke briefly to the point of the British dissatisfaction
with the differential between the China controls and those applying to
Eastern Europe. The sum total of t-hp Adtish eseent,djoi on this question
was to convey the impression that the t fo- eatab-
.X ~. :aretnteiQ..RYQ4U.,: _..~. R~
li h
'W
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Rr, Barnett made a closely reasoned presentation `ofthe lv. S.
On the specific question. of a. Otte for the CC'meeting. the British'
on the need to maintain both the European controls '.and the Chinese
Messrs. Wheeler, Gressweli, and Elden remarked that they had found the
statement of justification for the U.S. attitude veryILlmdrwting, 'and
hereto is a summary prepared by Mr. Barnett of the argument he developed
maturely when zney might rigure as a substantial factors in negotiating
should be regarded as a valuable, bargaining- asppt.' The voluntary, multi
,
real though
perhaps marginaly eccaovad.c etf , was something that
the trade controls removed. Th,o.,r
. t or, in addition to the
found the differentials extr sly distasteful
and.Yere ` `: ' b hays
differential. He stressed in particular that the Chinese evident]i
recommendations to the Ministers.
It remained the British contention, however, that the strategic
controls applicable to China might be modified without doing violence
to the UN Resolution branding China as an aggressor. They suggested
that they were quite prepared to make such a change after discussion
with the other nations maintaining the multilateral controls. They
mentioned in particular that an additional element in their thinking
was their belief that the contra ,a.r.$re, clis14t~ arotina in 8n7 case and
had better be modified in an, crder],y fashion'?
than to be brought #nto.diareput~ r .ponst. .. uestione and wholesale
in Paris conveying to them points that they had put before us.
if.there were to be a full-scale exchange of views with.the US and French
prior to the meeting. They specifically said that'they expected to talk
by that time Wt thought that such ' a schedule i uld press a bit tightly
Lnougn-t It wou.ia be agreeable to. aim for a period ten days or two weeks
after the end of the Foreign.Ministers' meeting but not earlier than the
first week of December. The British would have prepared their own views
In concluding the discussion, the British said-that they had partic-
was clearly one Bloo, but they also contemplated a reduction in the European
ularly wished to have it understood by the United States that they not
only envisaged one list applicable to the entire Com n iat World. which
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5-
ortant consideration in their unwil-
an itap
e
b
n
e
control:~ .list. This had
proposal for
lingnese to discuss China `controls in line with the ihrench have been
a Co'meeting, when they might later and within a short period
coming back with a proposal fora further reduction ofthe tmified list.
In 'response to a question as to whether it would now bt the .Eritish view
that an agreement : should be sought- on a reduction of , the Auropean list
and when a reduction of the China controls to the new European level, or
whether they contemplated an ii~ediate reduction of.tbe prresent China
controls to the present European. levels. while the British concept
was being discussed, W. Wheeler indicated the. British intended now to
take the latter approach.
Attachment ? StuanaY7 of US Argumentation in US-1M
Bilaterals on East West Trade
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1. The UK and. the US should, if possible, agree that the CO should not
adjournment of the Foreign Ministers Meeting, whichever were the later date..
This would permit-taking into account not only the Geneva discussions of
Exports but also progress., if any, in the Chinese-US Ambassadorial talks.
The British, ad referendum, accepted this suggestion. y
The US-UK.-France should continue to be bound by the July Trilateral
2
.
Agreements on handling of East-West Trade probleias with the USSR. This agree-
men t, in brief, was that there should be no retreat from the security trade
control system except in return for substantial Soviet concessions in other
fields, e,g, disarmament and security. The British stated that it was their
understanding that that position was unchanged, so far as the negotiating
requirements of the quadrilateral discussions at Gera are concerned.
3. As to elimination of the so-called China differential, our spokes-
men said that the US could not accept the UK conclusion. that it was timely
.or desirable to do this. In outline our arguments were$
The UN has named Caaffimunist China an a ssor and adopted a
a
.
resolution calling for a selective embargo. Neither action has been rescinded.
We have, therefore, a legal obligation to treat 4it'~ Ctlaa differently
'
from the rest of the Soviet Bloc. o a r-
b, The British, and some other Europeans tend to regard Chinese
Comrunist aggression as over. The, n ar stiot~ viols tcn the, arms and
w vtr^ s .s r .v 8y, ... e...
air build-up opposite Formosa, and Chinese a p ~.e~-;gip noL' ,reassure
fi
R we
us as to abondonment of Chinese Vonnm 15 aggrasei A
c. The British tend to regard the China- embargo as 'economically and
mi).itarily ineffective. W@ can admit that the egpe? P4 military. impact
of controls is not such as .toprfve:Cina`-sirs z,~ city, and, still
regard the controls as of vital jiportanca. cps the
inconvenience they create. It resents intensely_ theirJabolio significances
the controls are a tangible indication that a arge group.o "coax vies agree
to treat China as a pariah in the family of nations. Continuation of this
affront to their amour propre constitutes an effective fora of pressure.
d. The United States bears a 1adlit~-ry .le4d, an behalf of the Free
Word, of primary importance in defense of its seotrity in the Pacific area.
Our view as to the security requirements of the area shaatld be accorded
&pecsai respect by countries bearing leas or,no.Li itaaa'y _ op.o nsibilities
in the area. We regard perpetuation of differential cgatrols as essential
for security reasons. And to tIIoss who disagree with this'~uc ent and
desixe
CONFIIENTIAI.
11
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des;l r ,' .ro1axation r
,; f tensions between the United States an'd~ ~' nay
th
ciaa~ kiss N.ta
e most pxvrising M"""O for relaxation or ~~w" Qx ose
ten
s 1 on e,l s contin aticm of the bilateral Jlmb amdo '~ . rival al
k sin Genov i,
:r v
' ;
w b
s
b
eieve!{L~ We that
I . w~. n 711 o !1~liky 8t
bl
T'
~. oaparuni
k
onge an Y? ta ing atteept now being suds ? to 00" ww.r u understandings
and arrangements vhich sright?_stlminieh the danger of ` Chinese Caaumaniet resort
to force. Europe would have mach to loss from a failure off, the US-Comauniat
have been the result of. Free,Wot 4 ~, paeurs, To lessen t be
finuiess and relax the pressure prematurely srig 1 u$trate the pro-
f d d
the present temper of,.pub].ic and Cpigxsaicci ienedtates
nx. - f1~s 1 l .L _ . t 1 _ -_f i._ L'" ~.un..ew'Alllr AS tr.J' fide Ye ..~..,biic?.s. 1 WA a ?
The forego ,o~pgrvatime do no cis % ate assosaxont of
Chinese talks -which oould result rem .& Chinas` belief thatjt?-asn;,, divide.
,.cue west witnout meeting Ub tunes,
t,y
nit?nerto, in i.ts rejection of proposals to treat Cammnniat Mina even on the
same basis that we treat the USSR,
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(W. S. - DeLangy)
At the Paris Conference of Senior Economic.Officers",in Europe
trade had one hour on the agenda, Wednesday, 21 September.
I presented the attached paper, followed by Walstiom'a.presentation,
attacheda Mr. Waugh, in the chair, asked for. coumaent'. or, any.;atatement 'the,
coxitry representations present desired to make on Walstrom&s appraisal of
national attitudes as reflected in 0000M. There were no comments. Brown
(U.K.) questioned the cost ratio staff paper (SS-1) as relates to the
strategic evaluation of items. I invited his attention to the fact that
the concept was based on the effect of the over-all,econon r of the Bloc
and on his further questioning, I stated I did not accept the cost ratio
concept as an added criterion because in ny opinion it smacked of economic
warfare, and was not negotiable.
Regarding the bilaterals with the-U.K., which took place in London on
September 26, Moline, Barnett and myself met with Wheeler and Oressiell of
Defense and Edden of the Foreign Office. The discussion opened by u stating
that we would appreciate the present tbink&ng':of the` U.K. - representatives
towards trade controls, especially China. Wheeler bean his presentation
by stating that U.K. present think ,,,ti,~~}tr Qf items
pointed towards security requirements of ygBa4$].obal war, with
nuclear weapons. When questioned if limited Vary with conventional weapons
need not be equally considered, U.K. voiced the opinion that the bloc was
practically self-sufficient in that respect. U.K. stated they were working
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DRAFT SUI?MARY REPORT ON SENIOR ECONOMIC"OFFICERS CONFER N
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n Defense towards the formulation of such a list, and: anticipated readiness
. AV
in about, one month. U.K. gave no indication of list control - exceptt
not earlier than first week in December or at least-ten days after the end
Regarding the timing of ?9, forthcomin ,
they would attempt item justification.
U.K. had previous to this indicated little interest in the CHINCOM list.
They., however, did appear to react to the U.S. presentation and expressed an
appreciation of the U.S. position. The Foreign Office representative stated
that they did not agree with the U.S. position of.force or threat towards China
as a means of winning any change'in Chinese attitude.. Nevertheless, they
supportdd the U.S. position in the U.N. this year on the recognition issue.
They were not clear as to what this might mean for their attitude towards the.
U.S. position as relates to,-trade controls.
U.K. expressed the desire to come to a single list of controls contending
that China and USSR are one group and should have the same treatment on trade.
4hility of flexibility is related to a change in circumstances which might result
_f a firm line could be held during the oeneva talks between the U.S. and Chinese
.rnbassadors.
the necessity for holding to the present level. (Notes attached were prepared
Mr. Barnett emphasized the
~)y 1?ir. walstrom immediately following meeting.)
tf.S. responsibility in the China area and the necessity for the retention of
unified effort in the support of that position and stated that the U.S. at
this time had no room for manuevering on China controls and that the possi-
regarding China controls Barnett? presented t! y*,U.S. point of view on
of the Foreign Ministers Meeting, whichever was later-
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They did not agree that there could be a differential as relates to the
potential of each in limited wars with conventional weapons.
It was evident to me that as ,a result -,of _tbs. RMeB }~ , , ~., . and
the U. K. bilaterals, that unless there . ,.8s. te s .relates
to China controls on. the . part of.. ?44etn as Ke ,yi ,l~ ., ?~ fa .,sell .the
retention of the present level of controls to CiU.and find it' difficult
to et an a d COM c~1trols.
get any
So far as the 0000M controls themselves, I would-evaluate the U.K. intent
to be the proposal of a common list applicable.to the Bloc as a whole, and
controlling only such items as would contribute to the Bloc's ability to
wage a global war with nuclear weapons.
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