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December 16, 2016
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April 29, 2005
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September 13, 1962
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Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 INVESTIGATION AND STUDY OF THE ADMINIS. TRATION, OPERATION, AND ENFORCEMENT OF THE EXPORT CONTROL ACT OF 1949, AND RELATED ACTS HEARINGS SELECT COMMITTEE ON EXPORT CONTROL HOUSE OF REPRESENTATIVES EIGHTY-SEVENTH CONGRESS H. Res. 403 A RESOLUTION CREATING A SELECT COMMITTEE TO CONDUCT AN INVESTIGATION AND STUDY OF THE ADMIN- ISTRATION, OPERATION, AND ENFORCEMENT OF THE EXPORT CONTROL ACT OF 1949, AND RELATED ACTS SEPTEMBER 13 AND 14, AND OCTOBER 2 AND 3, 1962 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 CONTENTS STATI:Mh:NTS Page Ball, lion. George AV., Under Secretary of Statc ---------------------- -- 806 1-lecher, [Ion. Frank J., t 1{epre:'entative in Congress frorn the Blame of New ]ork--------- -------- - _------ - ------ - -- 706 liehrinan, lion. Jack N., Assis;airt Secretary of (bnurrcree, for Ilder- nat.ional Affairs--- ------ ---------- --- (133, 675 Bor!:ier, lion. 1Terbert. C., a Ilcpreseotative in Congress frorn: the Sate of N orth (arolina_ - - 700 Bourdon,, lieginald A., t t,cretary, to t; iuirulan^1iir,__-_- 97 Molitor, ndutn rc lx;lic v I u"., art; Po!altd w'j8 'tatene lit of the Sccretar, o' Slate re4p( ctinL~ si ct.ii , 1(7 of the House aflpropriationrs t9i11 for the Fortin A4:_i,tance Act (?f 1961, as ltmen led- T) Treasury, D'part!i_,'nt of hr: _eti_r oai.eit (h?tol;or 17, 11.162, trout Fred ]i. Smith, t (; (:run rat a u rl t i i c,-1 ]lafifrrd, 4:+i director, h ouse Sol llet CoAl ilittct Oil Lcport Control---. --- --- ------------ 3 1 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 INVESTIGATION AND STUDY OF THE ADMINISTRATION, OPERATION, AND ENFORCEMENT OF THE EXPORT CONTROL ACT OF 1949, AND RELATED ACTS THURSDAY, SEPTEMBER 13, 1$62 HOUSE OF REPRESENTATIVES, SELECT COMMITTEE ON EXPORT CONTROL, Washington, D.C. The committee met, pursuant to notice, at 9:30 a.m. in room 403, Cannon Building, I-Ion. A. Paul Kitchin (committee chairman) pre- siding. Mr. KITCIIIN. The committee will come to order. Dr. Behrman, as chairman of the select committtee, I want to per- sonally express my appreciation, as well as that of my colleagues on the committee, for your courteous acceptance of my invitation to ap- pear before this committee this morning. You have appeared before the committee on prior occasions and I am sure you are well aware of the interest this committee has in export control matters, with particular reference to control of ex- ports to Communist countries. As a result of our study, made through committee hearings and staff inquiries, a detailed report was submitted in May 1962, con- taining an analysis of our export control program. Incorporated in this report were a number of pertinent constructive suggestions and recommendations designed to strengthen control over exports to Communist countries. By delegation from the President, the Sec- retary of Commerce is the administrator of the basic export control statute-the Export Control Act of 1949. You are in charge of the export control program in the Department of Commerce and, as I understand it, responsible directly to the Secretary of Commerce for its administration. The select committee has an obligation during the remainder of this session of the Congress to follow up actions taken on its recom- mendations, which it has been doing with other responsible Govern- ment officials in agencies and departments having jurisdiction in some facets of export control matters. The sole purpose of this hearing today is in furtherance of carry- ing out that recognized responsibility. Among other things, the com- mittee wants to be advised of any changes in policy resulting from amendments to the Export Control Act which became effective July 1, 1962. At this point, I believe you have a prepared statement that you would like to submit to the committee. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Xffiroved For Re 2O0GM5M12 ACIAQRDW6gB00383R000100130001-8 :STATEMENT OF JACK N. BEHRMAN, ASSISTANT SECRETARY. OF COMMERCE FOR IN1ERNATIONAL. AFFAIRS; ACCOMPANIED BY FORREST D. HOCKERSMITH, DIRECTOR, OFFICE OF EXPORT' CON- TROL; EUGENE M. B:EtADERMAN, DIRECTOR, BUREAU OF INTER- NATIONAL PROGRAMS; THEODORE L. THAU, DIRECTOR, EXPORT POLICY STAFF; AND DEAN B. LEWIS, ASSISTANT GENERAL COUNSEL, DEPARTMENT OF COMMERCE Mr. BEIIRMAN. Yes. I am very glad to appear again before you on behalf of Secretary Hodges and the Department of Commerce, to talk about the adrrinistration and enforcement of the Export Control Act of 1949. I have appeared bef re you on several occasions and frequently by myself. I think Mr. Lipscomb at one time had a question in his mind as to whether or ot I was running this thing by myself. I want to bring before you this morning people who have been spending a very large a nount of their time in carrying out the recom- mendations of the committee, and to have them participate in the questioning you may ha- e of our activities. On my right is Mr. Eugene Braderman, Director of the Bureau of International Program:;, which has administrative responsibility for the act. On his right is theDirector of the Office of Export Control, Mr. Forrest D. Hockersmith. On my left is Mr. Theodore Thau, who advises the Director of the Bureau on many of the policy matters and the more difficult cases that come before us. On my far right is IVlr.? Dean Lewis, Assistant General Counsel for International Affairs, tisho provides legal counsel on the investigations and the followthrough on them. Mr. Llrscoazii. Do you still have final approval on all licenses granted ? Mr. BEIIRIIAN. Fina.. approval on the licenses is in the Secretary of Commerce. I think -6a are referring to the personal review I have made of licenses that do not come in to the Secretary. Yes, I am every other day or so going through a stack of licenses that Mr. Hockersmith brings me and we sit down and go over each one individually before it is issued for shipments to the Soviet bloc. Mr. KITCIrmN. You said "before it is issued." Are there licenses denied that do not get to your desk? Mr. BEIIRMAN. That s correct. Mr. KrrcHIN. Anything approved by an echelon below your desk comes to you for review' Mr. BEuRnrAN. That s correct, sir. Mr. KrrcmN. Those going to the Communist countries? Mr. BEHRNMAN. Thosoo going to the Soviet bloc area, plus Yugoslavia, do come to me for individual review before they are issued. AVir. KITCIIIN. How a )out Poland? Mr.BEII_RMAN. Poland as well. Mr. LrrscoMB. I stir: think you are in charge of the Department. Mr. BEIIRAIAN. I know you have a number of questions to ask on this subject, but I bolieve it will be helpful to you if I first briefly summarize- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Releai?e Mgf2Q C r &6#b80383R000100IN001-8 1. What we are doing with respect to the recommendations set forth in your report of May 25, 1962. 2. How we are interpreting and applying the 19.62 amendments to the act. 3. The considerations that have led to our approving and deny- ing since July 1 applications to export various items to the Soviet bloc. I We have given close and careful attention to your report of May 25. We regard it as a very important and constructive analysis of problems involved in carrying out the Export Control Act. We con- sider your recommendations, of course, especially significant. As we see it, recommendations B, C, and Dare addressed particularly to this Department. The others we read as directed primarily to the Con- gress and the Departments of State and Treasury. My letter to your chairman, dated August 16, reported what we were doing at that time to carry out your recommendations. I presume that letter will be part of your record. I would like here to bring that statement of our progress up to date. Your recommendation to increase the size of the export control in- vestigation-staff has already been partly implemented by adding seven investigators and two clerks. However, current budgetary problems, of which this committee is doubtless aware, are limiting our ability to do more in this area at this time. Our long-range plan is to bring the investigation staff up to a total of about 50 people by fiscal year 1967. Today we have a total of 35 people engaged in this work, of whom 23 are investigators. We have also moved to implement your recommendation that our investigation staff exercise more initiative and be more actively in- volved in planning the entire enforcement proormm, including that part carried out by delegations to the Bureau of customs and the For- eign Service. For some time now our departmental order assigning responsibilities in connection with the administration and enforcement of export controls has specifically provided that our export control in- vestigation staff and our General Counsel's Office and our Office of Ex- port Control should work together in the enforcement of. the export regulations and control programs, including the initiation, develop- ment, and recommendation of policy and measures for the control of the U.S. exports. These responsibilities are given to our investigation staff, in addition to the duty of investigating possible violations and developing evidence for appropriate administrative and penal actions. Our investigation staff is also participating actively in new enforce- ment programs we are in the process of developing with Customs and the Foreign Service. Your recommendation that the enforcement activities of Customs insure more adequate detection of export control violations is to be implemented on a number of fronts. Our principal efforts to date have been described in my August 16 letter. However, the budgetary prob- lems to which I have already referred, have constrained our ability to move very far in this field rioht now. On the subject of Customs enforcement of export controls, I would like to call to your attention our report (the 60th) for the second quarter of 1962. Chapter IV, beginning at page 22, is a special review of the work of the Customs Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 App need For Releag&'/d o'CI RDP65800383R000100130001-8 Bureau in our expo:?t:control program. In effect, it tells what Cus- toms does with the rioney that is transferred to it annually from our export control appropriation. Following your recommendation to strengthen Foreign Service participation in the export control program, we have been reviewing this subject with th D e epartment of State. Our investigation staff is taking an active part in this review. Your recommendation specifi- cally asks that therc be initiated an adequate training program for Foreign Service personnel for export control responsibilityy abroad; that the duties and responsibilities of such personnel be fixed; and that adequate persornel be assigned to insure that illegal diversions of strategic commodities are detected. We are creating our own pro- gram to train those Foreign. Service officers who will hereafter be going overseas to pet-form export control functions. We are talking with State Department people to try to get a reasonable time to train each economic defense officer before he leaves for his oversea assign- ment. Our program would seek to give these Foreign Service officers - a thorough understar.ding of the Export Control Act and U.S. export licensing policies as well as our investigation staff's techniques and methods for preventing illegal diversions, and for detecting and in- vestigating violations which occur. Further, we are planning to have our investigation staff and other enforcement people go overseas more often than in the past to give Foreign Service officers on-the-job train- ing, and also to lead regional meetings in exchanges of ideas and in- formation in this field. As far as your recommendation pertains to the fixing of duties of F )reign Service personnel, and the number to be assigned to this work by the Department of State, you will appreciate that these responsibilities are basically committed to that Department. While we are consulting with State on your recommendations I should defer to them on further details of what they are planning to do to implement this recommendation. We are also undertaking to effectuate your recommendation that, as an ,enforcement aid, we should arrange to see that Foreign Service personnel are promptly notified of outbound shipments moving under. validated licenses so that they can check on possible illegal diversions. Since we issue about 140,000 export licenses a year and under each license there may be from I to 10 (or even more) partial ship ments, it seems to us that the most feasible way to carry out the sub- stance of your recommendation is on a spot check basis. Otherwise, as you will appreciate, we would quickly swamp at least a number of our. key foreign service posts abroad. We have asked our investiga- tion staff to devise a program of the kind we believe your committee contemplates. They have proposed a procedure to increase . sub- stantially our postshipment checks in preselected cases. They. will select particular shipments for checking from scrutiny of ships' mani- fests and bills of lading. Information on these selected shipments will be transmitted to our Foreign Service personnel, with requests for,postshipment checks. TJnder this procedure neither the exporter nor the importer will know in advance that his particular shipment has been selected for checking. Our investigation staff has also under- taken to work with cur Foreign Service posts in certain sensitive countries to institute tracing investigations of select shipments made Approved For Release 2005/05/12 : CIA-RDP65B00383R000110Q130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 641 Before turning to your recommendation about technical data, I would like to assure you that we have also taken careful note of the statement at the conclusion of your recommendations on enforcement, that we should increase the number of our prelicense investigations, as well as our examinations of outbound shipments, of parcels sent by mail, and of our postshipment followups. I have already stated what we are doing in regard to increasing postshipment investiga- tions, and in my August 16 letter I told your chairman that we have substantially increased the number of our prelicense checks from 187 in 1961 to 258 in the first half of 1962. Actually, in the last 4 months we quadrupled such checks over the number made in the last calendar year. I also mentioned in my August 16 letter that we are working with the Post Office Department and Customs to increase inspections of mail shipments. Turning now to your recommendation that we take immediate steps to control more effectively exports of technical data, I want to make it clear that we fully share your concern on this subject. As you know, one of the principal reasons why we asked Congress to extend the Export Control Act permanently was that we thought it would facilitate our hiring the kind of skilled engineering and scientific per- sonnel necessary to review new technological developments for con- trol purposes and to pass upon applications for licenses to export technical data. Although the act was only extended for 3 years, we have been making efforts to recruit this kind of talent (a very diffi- cult task these days, at best). The current budgetary situation has, however, led to a temporary freeze on hiring in the Department, and this has so far prevented us from doing very much in this direction. On the substance of your recommendation, I know that the mem- bers of this committee appreciate that control of exports of technical data presents some very difficult problems. For one thing, data can be transmitted in spoken as well as written form, so that full control of technical data exports can involve us in problems of control over movements of engineers and other people having knowledge of this kind in their heads. In addition, there is a problem that results from the fact that exports of published technical data cannot be effectively -controlled with our free press and other means of communication. Consequently, we have dealt almost wholly with exports of unpub- lished technical data. But this restraint raises the question whether controls can and should be placed on the ability of people to frustrate ,our control by turning their unpublished technical data into published form through the simple process of putting it into a book, magazine, or patent. Furthermore, there is the question of the extent to which we ought to go beyond control of direct exports of technical data to the Soviet bloc, to deal with exports of unpublished technical data to free world countries in order to curb reexports of such data from free world countries to the Soviet bloc and exports of foreign-made products of such technical data from the free world to the Soviet bloc. &s the committee knows, we do impose restraints of this latter kind 0, exports of unpublished technical data to free world countries in thclimited fields of petrochemical plant technology, petroleum line- pipe nanufacturing technology, aircraft technology, and airborne elee- tronics equipment technology. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 642 EXPORT CONTROL ACT OF 1949 We will endeavor to implement the committee's recommendation on this score as much as possible. We believe that it is a subject, however, that must be approached with great care so as not to do unnecessary damage to our freedoms and. to the growth,of our economy and of the free world. We know such growth is very much tied up with the free flow of technological information, back and forth, within the free world. Your final recommendation ,of direct concern to this Department is that we maintain tight control of exports of prototypes and single units to Communist countries. As I stated in my August 16 letter to the chairman, we arE; scrutinizing each application for the bloc from the standpoint,of the commodity's possible significance as a prototype. We will continue do ng this. We find, of course, that not every re- quest for one unit means that it will be used as a prototype. Many times in the export business, as in domestic business, it appears that single units are pure fiased when only one is needed or because of the buyer's desire to determine from testing one, whether he should ulti- mately order a large quantity. We also find that not every purchase ofa single unit involves a risk of copying. In fact, there are many situations where it is not possible to copy an item merely by having one or more units to take apart and study. Of course, I would like to add here that our ability to do a better job in this field will be: improved as and when we are able to recruit the technologically trained people that we previously told you we need. II I turn now to my s ?cond subject : the 1962 amendments to the Ex- port Control Act, and how we are interpreting and applying them. The amendment to ,;ection 1(b) makes it a finding of Congress that unrestricted exports without regard to their potential military and economic significance may adversely affect our national security. This amendment we interpret as affecting our implementation of the amend- ments to sections 2 and 3. The first amendment to section 2 declares it to be the policy of the United States to formulate, reformulate and apply export controls to the maximum extent possible in cooperation with other nations, and to formulate a unified commerce and trading policy to be observed by non-Communist nations in their dealings with Communist nations. In keeping with the first clause of this amendment, we (a.) assist the Department of State in efforts to maintain the cooperation of other nations in a high level of multilateral export controls, and (b) formu- late? reformulate and apply the U.S. export controls we administer as.nuch as possible to z.ccord with the multilaterally agreed level, sub- ject, of course, to one major qualification. This qualification is that we should not abandon control over exports of an item simply because other countries fail of refuse to cooperate with us. in such control. The other part of this. amendment, that which refers to unifier' commercial and trading- policies to be formulated with non-Commur0t countries, includes muc_i more than the scope of export control as 1,.re- tofore understood. We are working with the Department of Stce on ways of making certain that we have proper methods of tradiig with the bloc, but this will '3e a long-term problem and it is to-) early, I believe, to give you any definitive report. Approved For Release 2005/05/12 : CIA-RDP65B00383R00010013000,1-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 643 The other amendment to section 2 of the act declares it to be the policy of the United States to use our economic resources and advan- tages in trade with Communist nations so as to further our national security and foreign policy objectives. Having in mind that our eco- nomic resources and advantages in trade obviously include much more than our power to impose export controls, we construe the scope of this. amendment as transcending our former statutory authority and re- sponsibility under the Export Control Act. To the extent the policy expressed in this amendment can be `effectuated under control pro- cedures, however, we undertake it by denying licenses when this is found to be for the benefit of our national security and foreign policy, and by approving them when that course appears to be beneficial to those national interests. Further, we believe this amendment gives congressional policy authorization to our varying the scope and sever- ity of export controls to particular countries, from time to time, as our national security and foreign policy interests require, e.g., during a period of heightened international tension. Finally, we believe that the policy of this amendment must be related to the policy expressed in the amendment to section 3 (a), a finding of a trade `advantage" being one means, for example, of counterbalancing what might otherwise be a claim of "detriment." The amendment to section 3 (a) appears designed to make it an ex- plicit responsibility to do as we have been doing by implicit authority of the law prior to the amendment. It states that our rules and regu- lations shall provide for denial of export licenses to ship any item, to a nation or combination of nations threatening our national security under the conditions set forth therein. We have adopted a regulation to this effect which has just been published in the Federal Register. As we interpret this amendment, we are called upon, in the case of any application to ship an item to the Soviet bloc, for example, to consider whether that item will significantly contribute to the military or economic potential of the bloc. If the item does, from the infor- mation available to us, contribute in a significant way to the bloc's military potential, then we should certainly deny the application be- cause it is very difficult to, see how approval would. not prove detrimen- tal to our national security and welfare. When, however, it is found that an item will contribute significantly to the economic potential of the Soviet bloc, it may or may not be detrimental to our national security and welfare to approve it. There is, of course, a burden on anyone who would argue that there is no such detriment. One sit- uation where this burden can at times be met is where the same item, or a close equivalent, is readily available to the bloc from other free world sources. We have in particular cases concluded that, under such circumstances, and assuming that we are unable to persuade other free world countries to refuse to export the item in question to the Soviet bloc, we should properly conclude that export of the item from the United States would not be detrimental to our national security or welfare. In such cases we have decided that as long as the bloc can get the same or a similar item elsewhere, it is the fact of acquisition and use by the bloc that affects our security and welfare-not the source of the export. And, when we consider that denial under such circumstances only operates to the detriment of our own business firms and workers, we believe we are not unwise in concluding on bal- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Aparovred For Release 2005/05/12: CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 ante that there is more detriment to our national security and economic welfare in denial t1- an there is in approval. There is, of course, a "gray" area between the military and economic, where we may find an item that appear; to contribute to both potentials, but contributes significantly more t) the one than the other. Such items must, of course, be dealt with. on a case-by-case basis, in the light of such fac- tors as the relative degree of contribution to the military or economic potentials, and the relative degree of effectiveness of our control. Fi- nally, we read this amendment as saying that if an item will not con- tribute significantly to either the military potential or economic po- tential of the bloc, we should-unless there is some other reason to deny it-approve this license. I do not want you to get the impression that we see this amend- ment Ito section 3 (a) of the act as clearly and easily applied in every case that comes before us. On the contrary, to find facts bearing on whether a proposed export would or would not contribute to the "military or economic potential" of the Soviet bloc and is or is not detrimental to our national security and welfare, is very often a diffi- cult and time-consuming project. However, we realize that it is our responsibility to carry out this law to the very best of our ability, and we shall strive constantly to do so. Lastly, with regard to the increased criminal penalties provided by the amendment to section 5, I should point out that we have not yet had any criminal ca=e to which the amendment will apply, and there- fore have no judicial interpretation to bring to your attention. How- ever, I can tell you that we have regarded the congressional intention implicit in the amendment as being applicable by analogy in our ad- ministrative export denial proceedings, warranting more severe sanc- tions for willful and repeated violations than may heretofore have been applied. In addition, at our request, Customs has recently increased the penalties they will impose in seizure cases involving export violations. My foregoing remarks about our interpretation and application of the amendments to the Export Control Act lead me to my final topic- an explanation of our reasons for granting and denying various ap- plications to ship items to the Soviet bloc since July 1, 1962. Asstated in. my August 16 lets er to your chairman, we recently denied 112 ap- plications for $43 million of automotive machine tools. Our reasons for so doing were stated in my August 27 letter to your chairman, which I trust will al 3o be part of the record, along with our explana- tory press release of August 18, copies of which are available for your information. We also recently approved a number of applications covering a variety of commodities and some technical data, as also described in my August 27 letter.; As stated therein, our reasons for approval were that these items appeared to be readily and immediately avail- able to the bloc from non-U.S, sources, and they were not deemed significant to the military or economic potential of the bloc in any way that would prove detrimental to the national security and welfare. Our August :27 letter, incidentally, also mentions a number of other items that we recently denied to the bloc. They included Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R00010~1~0001-8 EXPORT CONTROL ACT OF 1949 items which we are in a position to control unilaterally, as to which we believed we could make our denials effective so far as the bloc is concerned, and items deemed significantly advanced from a tech- nological standpoint. My associates and I will be glad to give your committee more detail on any of the cases that are mentioned in my August 16 and 27 letters, or, on any of the other cases that we licensed to the bloc since July 1, 1962. In conclusion, I would like to call to your attention some statistics on our export licensing to Eastern Europe from our most recent quar- terly report-the 60th-as well as some that are more up to date than those available to you from that report. On page 4 of the 60th quarterly report, we stated that in the second quarter of 1962 we- approved $10.8 million of applications for Eastern Europe as com- pared with $13.3 million in the first quarter. In the first 6 months of 1962, we approved a total of $24.2 million of exports to Eastern Europe, approximately 35 percent less than in the first two quarters of 1961. In addition, in the second quarter of 1962-as appears from page 6 of the report-we rejected applications for Eastern Europe valued at $1.2 million. Thus far in the third quarter of 1962-July 1-September 13-we have processed applications valued at $60.3 million for Eastern Europe of which we rejected $44.4 million-including the 112 cases of auto- motive machinery. During this period we approved $15.9 million of applications. A comparison of the value of applications approved for Eastern Europe from January through September 13, 1962, with the value of applications approved for Eastern Europe in the first three quarters of 1961, shows that at this point we are approving about 20 percent below 1961; namely, $40.1 million as against $49.9 million in the 1961 period. This includes the cases referred to in my August 18 and 27 letters. We will be glad to answer questions for you. Mr. KITaxxlN. Thank you very much. Before we get into questions, I think probably we ought to make a matter of record some of the items that have been referred to by Dr. Behrman in his statement. First, I would like to submit for the record as exhibit A a copy of the newly amended statute known as the Export Control Act of 1949 as amended. Amendments are set forth in italic. (The document referred to, exhibit A, follows:) EXHIBIT A EXPORT CONTROL ACT or 1949 (As extended and amended by public Law 87-515, 87th Cong.) AN ACT To provide for continuation of authority for the regulation of exports, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,, That this Act may be cited as the FINDINGS SECTION 1. (a) Certain materials continue in short supply at home and abroad so that the quantity of United States exports and their distribution among -importing countries affect the welfare of the domestic economy and have an important bearing upon fulfillment of the foreign policy of the United States. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 646 EXPORT CONTROL ACT OF 1949 (b) The unrestricted export, of materials without regard to their potential military and economic significance may adversely affect the national security of the United States. Sac. 2. The Congress hereby declares that it is the policy of the United States to use export controls to the extent necessary (a) to protect the domestic economy from the excessive drrin of scarce materials and to reduce the inflationary im- pact of abnormal foreii;ndemand; (b) to further the foreign policy of the United States and to aid in fulfilling its international responsibilities; and (c); to exer- cise the necessary vigilance over exports from the standpoint of their significance .to the national security of the United States. The Congress further :declares that it is the policy of the United States to formulate, reformulate, and apply such controls to the maximzum ex tent possible in cooperation with all nations with which the United States has defense treaty commitments, and to f 7rmulate a unified commercial and trading policy to be observed by the non-C9mmunis'-dominated nations or areas in their dealings with the Communist-dominated nations. The Congress further declares that it is the policy of the United States to use .its economic resources and advantages in trade with Communist-dontiinated nations to further the national security and foreign policy objectives; of the Uited States. AUTHORITY Sac. 3. (a) To effectuate the pcllcies set forth in section 2 hereof, the President may prohibit or curtail the exportation from the United States, its territories, and possessions, of any articles, materials, or supplies, including technical data, except under such rule, and regulations as he shall prescribe. To the extent necessary to achieve effective enforcement of this Act, such rules and regulations may apply to the financ: ng, transporting, and other servicing of exports and the participation therein by any person. Such rules and regulations shall 'provide for denial of any request or application for authority to cxport articles, ma'ter'ials, or supplies, including tehnical data, from the United States, its territories and possessions, to any nation or combination of nations threatening the national security of the United k~'tates if the President shall determine that such. export makes a significant conributi-on to the military or economic potential of such nation or nations whic;, would prove detrimental to the national security and welfare of the United Stc,tes. (b) The President may delegate the power, authority, and discretion con- ferred upon him by this Act, to such departments, agencies, or officials of the Government as he may deem appropriate. (c) The authority corner red by this section shall not be exercised with respect to any agricultural commodity, including fats and oils, during any period for which the supply of such commodity is determined by the Secretary of Agricul- ture to be in excess of the. requirements of the domestic economy, except: to the extent required to effectuate the policies set forth in clause (b) or clause (e) of section 2 hereof. SFc.4. (a) In determining which articles, materials, or supplies shall be con- trolled hereunder, and in determining the extent to which exports thereof shall be limited, any department, agency, or offical making these determinations shall seek information and advice from the several executive departments and inde- pendent agencies concerned with aspects of our domestic and foreign policies and operations having an important bearing on exports. (b) In authorizing exj orts, full utilization of private competitive trade. Chan- nels shall be encouraged insofar as practicable, giving consideration to the interests of small busine..s, merchant exporters as well as producers, and estab- lished and new exporters, and provisions shall be made for representative. trade consultation to that end. In addition, there may be applied such other stand- ards or criteria as may be deemed necessary by the head of such department, or agency, or official to cai ry out the policies of this Act. SEc. 5. (a) Except as provided in subsection (b) of this section, in case of any violation of any provision of this Act or any regulations, order, or license issued hereunder, the violator or violators, upon conviction, shall be punished by Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release '2 5P TUA-ReF5B 83R0001001366 1-8 a fine of not more than $10,000 or by imprisonment for not more than one year, or by both such fine and imprisonment. For a second or subsequent offense, the offender shall be punished by a fine of not more than three times the value of the exports involved or $20,000, whichever is greater, or by imprisonment for not more than five years, or by both such fine and imprisonment. (b) Whoever willfully exports any material contrary to any provision of this Act or any regulation, order, or license issued hereunder, with knowledge that such exports will be used for the benefit of any Communist-dominated nation, shall be punished by a fine of not more than five times the value of the exports involved or $20,000, whichever is greater, or by imprisonment for not more than JR years, or by both such fine and imprisonment. SEC. 6. (a) To the extent necessary or appropriate to the enforcement of this Act, the head of any department or agency exercising any functions here- under (and officers or employees of such department or agency specifically de? signated by the head thereof) may make such investigations and obtain such information from, require such reports or the keeping of such records by, make such inspection of the books, records, and other writings, premises, or property of, and take the sworn testimony of, any person. In addition, such officers or employees may administer oaths or affirmations, and may by subpena require any person to appear and testify or to appear and produce books, records, and other writings, or both, and in the case of contumacy by, or refusal to obey a subpena issued to, any such person, the district court of the United States for any district in which such person is found or resides or transacts business, upon application, and after notice to any such person and hearing, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce books, records, and. other writings, or both, and any failure to obey such order of the court may be punished by such court as a contempt thereof. (b) No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (27 Stat. 443) shall apply with respect to any individual who specifically claims such privilege. (c) No department, agency, or official exercising any functions under this Act shall publish or disclose information obtained hereunder which is deemed con- fidential or with reference to which a request for confidential treatment is made by the person furnishing such information unless the head of such department or agency determines that the withholding thereof is contrary to the national interest. EXEMPTION FROM ADMINISTRATIVE PROCEDURE ACT SEC. 7. The functions exercised under this Act shall be excluded from the op- eration of the Administrative Procedure Act (60 Stat. 237), except as to the requirements of section 3 thereof. QUARTERLY REPORT SEC. 8. The head of any department or agency or official exercising any func- tions under this Act shall make a quarterly report, within 45 days after each quarter, to the President and to the Congress of his operations hereunder. SEC. 9. The term "persons" as used herein shall include the singular and the plural and any individual, partnership, corporation, or other form of associa- tion, including any government or agency thereof. EFFECTS ON OTHER ACTS SEC. 10. The Act of February 15, 1936 (49 Stat. 1140), relating to the licensing of exports of tin-plate scrap, is hereby superseded ; but nothing contained in this Act shall be construed to modify, repeal, supersede, or otherwise affect the provi- sions of any other laws authorizing control over exports of any commodity. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 moved For Rel a 00 5142 :AItA RDI? 00383R000100130001-8 SEC. 11. This Act shall take effect February 28, 1949, upon the expiration of section 6 of the Act of Jule 2, 1940 (54 Stat. 714), as amended. All outstanding delegations, rules, regulations, orders, licenses, or other forms of administrative action under said section it of the Act of July 2, 1940, shall, until amended or revoked, remain in full force and effect, the same as if promulgated under' this Act. SEC. 12. The authority granted herein shall terminate on June 30, 1965, or4 any prior date which the Congress by concurrent resolution or the President nay designate. Mr. 11CITCHIN. Next I would like to offer for the record exhibit B., at the suggestion of Dr. 13--,hrman--a very informative statement-"Cus- toms Role in Export Co:trol" as contained in the 60th quarterly report, the second quarter of 19 32, published by the Department of Commerce. (Exhibit B referred to follows:) THE CUSTOMS ROLE IN EXPORT CONTROL The 59th quarterly report; discussed the broad aspects of enforcement of export controls. The major source of assistance in enforcement of regulations outside of the Department is the Treasury Department's Bureau of Customs. The role played by that Bureau is so important to the export control program that. It warrants separate treatment. During the calendar year 1961 approximately 7 million shipments requiring export declarations and valued at almost $20.9 billion were made from the United States.' It is anticipated that the number and value of export shipments will continue to increase annually as the export expansion program gains momen- tum. Exportations from the United States must be cleared either through U.S. customhouse (or customs airport office) or through a post office. The bulk of these shipments, from the standpoint of quantity, value, and strategic significance, are cleared through customs. The, Bureau of Customs has the important task of assuring that all export ship- ments (except shipments by mail for which the Post Office Department is respon- sible) are made strictly in accordance with export control regulations. Customs performs this task by three related activities: (1) examination of shipping dgcu- ments, including validated export licenses, shippers' export declarations, bills of lading, air waybills, carrier manifests, etc.; (2) physical examination of export shipments; and (3) appropriate actions against violators, including seizure of proposed shipments being made or about to be made in violation of export control regulations. The Department of Commerce transfers approximately one-third of its export control funds to the Bureau of Customs for that agency's export control activi- ties. The amount transfer-ed during the fiscal year 1962 was $1,237,000. The transferred funds pay for program supervision and direction, and for the salaries and expenses of the following types of personnel: export control specialists who examine shipping documents; Inspectors who physically examine export shipments ; openers ind packers who assist inspectors ; Customs agents ; Customs port investigators and export guards who cover certain international bridges on the Mexican border for the purpose of preventing unauthorized exportations. There are a total of 200 such employees. EXAMINATION OF SHIPPING DOCUMENTS The Customs role in export control begins with examination of shipping docu- ments Primarily, this examination provides insurance against (1) willful I Tii flenre includes shipments to Canada for consumption in Canada. Shipments in this category do not require export licenses from the Department of Commerce. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For ReleaseE?N,q~/l0Ila;T A P&5@99~83R0001001 1-8 or inadvertent attempts to export strategic commodities under a general license when a validated export license' is required; or (2) other willful or inadvertent violations of export control regulations. The two principal documents used by Customs in clearing export shipments are the validated export license and the shipper's export declaration. The export declaration is a document on which the exporter "declares" his ship- ment-in other words, tells the Government what and how much he is shipping, to whom he is shipping, and to what country he .s shipping. The declaration also includes other pertinent information, such as gross weight, marks and numbers of the packages, name of the exporter's forwarding agent, name of the intermediate consignee, etc. If an exporter is shipping a commodity which requires a validated license, he must present the license and a shipper's export declaration to Customs. If he is making a shipment which does not require a validated license, he presents only a shipper's export declaration to Customs. The principal phases of the documentary examination activity are as follows: 1. If the exporter is shipping under a general license-i.e., presents only an export declaration-Customs must make sure that the shipment meets the terms of the general license and does not require a validated license. For example, an exporter might present a declaration covering the exportation to Belgium of lithium bromide, an industrial chemical, without presenting a validated export license. In that case Customs would reject the declaration since lithium bro- mide requires an export license to all foreign destinations except Canada. Experience shows that each month the Customs Service stops several hundred attempts to export merchandise without the required export licenses. While most of these attempts are made through ignorance or misunderstanding of the regulations, they constitute potential violations which, if not stopped, would jeopardize she objectives of the export control program. 2. If the exporter presents an export license as well as an export declaration, Customs must compare the two documents to ascertain that the declared ship- ment is within the terms of the license and that it is consigned to the destination and consignee authorized by the license. 3. Customs makes sure that the shipper's export declaration is properly pre- pared in all respects, that it is signed and presented by the exporter or his authorized forwarding agent, and that it meets the requirements of the regula- tions in all other respects. 4. Customs is supplied with a list of U.S. firms and persons suspended from the privilege of exporting, and with a list of foreign firms and persons suspended from the privilege of receiving U.S. goods, because of previous violations of the regulations. Export declarations are checked against these lists to assure that such firms and persons neither export nor receive U.S. goods. 5. Customs requires presentation of bills of lading, air waybills, commercial invoices, shipping instructions, or other documents bearing upon a particular exportation whenever there is suspicion of a false commodity description on the export declaration or some other violation of export control regulations, and when review of these documents may assist in allaying or confirming the suspicion. 6. Export control examiners see to it that the exporter has complied with any special instructions on the face of the license (usually designed as safeguards against unauthorized transshipment from the authorized country of destination) and has met all other applicable requirements. 7. Customs makes a record of shipments against each export license so that the total quantity shipped under the license will not exceed the amount licensed and so that the Department of Commerce may be informed of the actual ship- ments made under each license issued. 8. Export control regulations provide that a "destination control statement" must appear on the export declaration, the bill of lading (or air waybill), and the commercial invoice for virtually all commercial exports. This statement serves to notify foreign parties and their agents of countries to which reexporta- tion of U.S.-origin goods has been authorized, and conversely to inform them of their responsibility not to divert U.S.-origin commodities to unauthorized destinations. Customs export control examiners make sure that the statement appears on export declarations in clearing individual shipments. In addition, 2 The terns "general license" and "validated export license" are defined on p. 1 of this quarterly report. 77836-62-pt. 3-2 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 A bved For Releu G051 ftl ,: -1RJDRg4 00383R000100130001-8 Customs conducts occasional spot checks of bills of lading, air waybills, and coin- mercial invoices to test compliance with the regulation insofar as those docu- ments are concerned. 9. Another important part of export document review is examination of car- rier manifests (a) to assure that all shipments are covered by export declara- tions; (b) to detect any commodity descriptions inconsistent with those on. the corresponding export dech.rations. PIIYSICA'I EXAMINATION OF EXPORT SHIPMENTS Customs inspectors have been called "the last line of defense" in the U,fted States against violators cf export control regulations. Up until the time the inspector enters the picture; proposed exports have been checked only against documents. Customs inspectors, on a spot check basis, see the merchandise it- self and decide whether it. is actually what the documents say it is. Shipments selected for examination are those which, due to a combination of factors, such as destination; exporter, consignee, commodity, etc., are deemed most likely to involve violations. For example, special emphasis is placed on inspection of shipments cc nsigned to Soviet bloc countries and Cuba. Particu- lar shipments are also in3Pected on the basis of tips by informants or other special information. The inspection program includes examination of pas- sengers' and crewmembers' baggage as well as inspection of cargo. From time to time Customs inspectors employ a technique, known as "blitz inspections," which supplcments and strengthens the normal spot check pro- gram. A "blitz" inspection is basically a concentrated inspection effort. For example, a port may assign 'a number of inspectors to examine as much of the cargo being laden aboard t. given vessel or plane as possible. Blitzes may also take the form of (a) inspe2t~on of all shipments, or as many shipments as possi- ble, for a given "sensitive" destination or known transshipment point; (b) tem- porary concentration of inspection effort on air shipments; or (c) a "commodity blitz"-i.e., inspection of all shipments, or as many as possible, of certain types of commodities in connect-on with which violations are deemed most likely to occur. Experience has shown that news of such a blitz tends to spread rapidly along the waterfront or in airport .cargo rooms. Thus blitzes advertise the fact that export shipments are subject to inspection and have a good psychological effect with respect to the prevention of future violations. Customs inspectors also conduct periodic physical examinations of shipments at international dispatching depots of the Post Office Department as a means of detecting and preventing, violations of export control regulations by shippers using the mails. A suffic ent number of these inspections are held (a) to assure that mailers generally are complying with the regulation in a reasonably satisfactory way; and (b) to detect specific violations and take appropriate action against firms or persons involved in such violations. Inspections also serve as a means of educating mailers with respect to their responsibility under export control regulations. In some cases Customs pert investigators, working under the Customs Agency Service, which is the investigative and enforcement branch of the Bureau of Customs, conduct physical examinations of merchandise. These examinations are conducted primarily in connection with tips by informants, blitz inspections, and inspections of passenger a' and crewmembers' baggage. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005] 32: gdQC?P0((38 900100130001 I Shipments to Soviet bloc countries receive special scrutiny and attention. For example, vessels and planes departing directly or indirectly for parts in Soviet bloc countries or Cuba must present to Customs complete cargo manifests prior to Customs clearance for that portion of the cargo which is to be discharged at a port or ports in these destinations. (Other vessels and planes are permitted to present manifests within 4 work days after clearance.) Also, as indicated above, shipments consigned to Soviet bloc countries and Cuba have high priority for purposes of physical examination of merchandise. Collectors of Customs on the Mexican border operate under special instructions designed to prevent unauthorized exportations to Cuba via Mexico. The principal type of action taken by the Customs Service against violators of export control regulations is seizure of merchandise being or about to be illegally exported. Such seizures are made under the Espionage Act of 1917 (22 U.S.C. 401 et seq.). This law also permits seizure of goods already exported if and when the goods are returned to the United States. During the fiscal year 1962 the Customs Service made 284 seizures of mer- chandise, valued at $912,468.01, about to be exported for actual or suspected violations of export control regulations. Seizures normally begin with suspected or actual irregularities detected as a result of export document examination or physical inspection of merchan- dise. When significant, such irregularities are reported to the Customs Agency Service. Investigations by the Customs Agency Service, which may result in seizures or other actions, also originate with information furnished by infor- mants, business competitors, the investigations staff of the Department of Commerce, and other Government agencies. In the field of export control investigation a close working relationship is necessary between the Customs Agency Service and the export control investi- gations staff of the Department of Commerce. The investigations staff fre- quently requests the Agency Service to investigate actual or suspected viola- tions, and the Agency Service often requests and receives advice and assist- ance from the investigations staff concerning the action to be taken in a par- ticular case. Investigations conducted by the Agency Service, either on its own initiative or at the request of the investigations staff, may result not only in seizure of merchandise, but also in the initiation of administrative com- pliance proceedings by the Department of Commerce and/or criminal proceedings initiated by the Department of Justice. Other actions which may be taken by the Customs Service, either on its own initiative or at the request of the Department of Commerce, include : (1) Issuance of orders to prevent lading aboard the exporting carrier of a shipment believed to be in violation of export control regulations ; (2) Detention and/or seizure of an exporting carrier being used to ex- port a shipment in violation of the regulations ; (3) Orders to unlade from the exporting carrier a shipment believed to violate the regulations ; and (4) Issuance of formal or informal warnings to exporters involved in violations. Mr. KITCnIN. Before we get into other questions, I think we should put these other items into the record for ready reference. As exhibit C, a summary of the licensing of exports to the Soviet bloc countries since the extension of the Export Control Act, approved July 1, 1962. (Exhibit C referred to follows:) Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 652 EXPORT CONTROL ACT OF 1949 EXHIBIT C Licensing of exports to Soviet bloc countries since extension of Export Control Act of 1949 (approved July 1, 1962) Commodity July 5 TV receivers and parts (consumer models for exhibit and eventual resale;. Portable electric tools (for use vflth pulpmill equipment previously shipped). 6 Industrial sewing machine parts (replacement parts) ------ Electron tubes (fresh water conserter)____________________ Cigar leaf tobacco, unmanufactured_______________________ Portable electric tool parts________________________________ Chemical specialties (for laboratory use) ------------------ Industrial chemicals, sample______________________________ Copper alloy pipe fittings (for us( inpapermiPlmachinery) 9 Portable electric tool (for use in it otorcar repair workshop)_ 10 Papermill machinery parts (for usein newsprint mill)---- 11 Chemical specialties (sample)_____________________________ Papermill machinery (for use in newsprint mill) ---------- Technical data (patent)___________________________________ -----do---------------------------------------------------- hand tools, petroleum products, electrical machinery parts, rectifiers, grinding whe(ls (for maintenance and repair of locomotives), 12 Research laboratory equipment (for, use in filtering light)-- Scientific and professional instru:neht parts (for consumer photographic use). Synthetic rubber manufactures (for experimental use) ----- Abrasive products, steel wire, textile manufactures, iron and steel hardware, industrial machine parts, metal- cutting machine tools, ball bearings, iron and steel manu- factures, handtools (for maintenance and repair of loco- motlvesr: Through Sweden aid-Denmark. Iron and steel hardware parts for use in papermaking machine). - 13 Flame safeguards for heating station______________________ Construction machinery parts (f )r use in processing agri- cultural chemicals). Construction machinery parts (for experimental purposes)- Industrial instruments and parts (for use in production of agricultural chemicals). Locomotive parts, handtools, griphito products, electric motor, electrical testing inst?ument parts, portable electric tools, electrical machin? ry, cotton manufactures and textile manufactures (for maintenance and repair of locomotives manufactured i i Denmark and Sweden for Hungary). Pulp machine parts ----------------------------------------- 16 Paper pulp machine parts _______.__:________.._____________ Iron and steel hardware, diesel engine parts, electric generators and parts, electric :notor parts, roller bear- ings, handtools, petroleum products, chemical specialty compounds, industrial heating units, portable electric tool parts, transformers, ftses, electric quantity- indicating instruments (for maintenance and repair of locomotives manufactured in Sweden for Ilungary). 17 Industrial chemicals (for use as it secticide) --------------- Power-generating machinery parrs (for use in locomotives manufactured in Sweden for L ungary). 18 Research laboratory equipment ifor use in food testing)-- Construction machinery parts (replacement parts for machinery previously shipped). Industrial chemicals (for use in processing focds)__________ Photographic equipment (for consumer use) -------------- Diesel engine parts, railway tr1,nsportation equipment (for use in maintenance and rep iir of locomotives manu- factured in Sweden for Irungar;i). Electronic equipment (for maintenance and repair of British-supplied TV broadcast equipment). 19 Rubber belting (replacement pats for feed plant previ- viously shipt:-ed). - Tobacco, unmanufactured cigar 1 mf----------------------- Electronic computer (for use in (hemical analysis of ma- terials). Lubrication equipment (for us) in maintenance and repair of locomotives manuft ctured in Sweden for Hungary). Automobile passenger car (for use in philanthropic relief work). See footnotes at end of table, p. 056. 333 71 1, 810 96 9 6 95 60 63,003 1 195, 256 (1) (1) 1,241 676 112, 801 6 222 13,728 1,375 28,146 38,958 885 857 71,968 74,000 132,976 32,488 5,690 2, 492 3,081 59,387 4,160 1,042 180,000 1, 545 1,167 U.S.S.R. Czechoslovakia. U.S.S.R. East Germany. U.S.S.R. Hungary. Ruin ania. U.S.S.R. Czechoslovakia. U.S.S.R. Czechoslovakia. U.S.S.R. U.S.S.R. Poland. Hungary. Czechoslovakia. Hungary. Czechoslovakia. Hungary. U.S.S.R. Czechoslovakia. Bulgaria. Czechoslovakia. U.S.S.R. Hungary. Rumania. Do. Hungary. U.S.S.R. Hungary. U.S.S.R. Czechoslovakia. Hungary. Do. Do. Do. Rumania. East Germany. Poland. Hungary. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 20O5 22o LRDAPc,5RQ0AW0001001300,t j1 Licensing of ecports to Soviet bloc countries since eivtension of Export Control Act of 1949 (approved July 1, 1962) -Continued $554 230,511 432 867 675 300,000 20 U.S.S.R., Czechoslo- vakia, East Germany, Cuba. Hungary. Czechoslovakia. Do. U.S.S.R. Hungary. East Germany. Hungary. Technical data (12 applications approved for filing of patent applications). Electrical quantity recording instrument (for agricultural research use). Glassmakin.g machines and parts (for use in manufacture of glass tumblers). Construction machinery parts (for use in manufacture of ceramic goods. Textile machine parts (replacement parts for textile ma- chine manufactured in Japan for U.S.S.R.). Industrial service industry machine parts (for mainte- nance and repair of locomotives manufactured in Swe- den for Hungary). Metal manufactures (replacement parts for papermaking machine manufactured in the United Kingdom for U.S.S.R.). Unmanufactured cigar leaf tobacco----------------------- Industrial chemicals (for testing purposes in the lacquer industry). Photographic filters (for use in commercial photography)_. Organic chemicals (may be used either in the pharmaceu- tical or textile industries). Technical data (4 applications)--------------------------- Industrial instruments and parts (for maintenance and repair of locomotives manufactured in Sweden for Hungary). Naval stores (samples for testing)__________________ Synthetic resin (sample for testing)________________ Leaf tobacco, unmanufactured---------------------------- Technical data (for foreign filing of patent applications)--- 46 624 ( 204 5 41 3, 315 (I) Do. U.S.S.R. Cuba. Hungary. East Germany. Rumania. East Germany. East Germany, U.S.S.R., Hungary, Rumania, Czechoslovakia. Czechoslovakia. Do. Do. Do. Synthetic rubber (for sample)_______________________50 Vegetable oils and fats (sample) ----------------- _34,000 Pearlessence, synthetic (for costume jowelry)------------- Industrial motor controls (for use in hearth furnace being 456 manufactured in the United Kingdom for Czechoslo- vakia) . '26 Acetate filament yarn (sample)___________________________ 36 Petroleum products (for use in bunkering purposes) ------- 1,450 Industrial chemiials (for production of textile intermediate 28,800 chemicals). :27 Synthetic resin (for manufacture of rubber articles such as 1,925 shoe soles and floor tile). Electron tube parts (used in manufacture of radio receiving 055 tubes). Industrial sewing machine parts__________________________ 2, 787 Cotton twine (used in sausage making machine) ---------- 1,945 Electronic equipment (replacement parts for electronic 10 equipment manufactured in West Germany for Hun- gary). 30 Aircraft parts (for maintenance and repair of aircraft for 21,000 commerical airline, 2 applications). 50 .Aug. 3 Synthetic rubber (sample)________________________________ Radio beacon transmitters and parts (to be installed as 23, 953 i t) t rpor . a an aid to civil air navigation a S Technical data-------------------------------------------- (1) Technical data (2 applications)___________________________ (1) Technical data-------------------------------------------- Petroleum products (sample)_____________________________ Cellulose acetate molding and extruding powder (used inmanufacture of plastic products). Do. Poland. U.S.S.R. Hungary. Czechoslovakia. Rumania. Hungary. Poland. Czechoslovakia. Do. U.S.S.R. Czechoslovakia. East Germany. Czechoslovakia. Do. 1 Cementing preparations---------------------------------- resins (for testing purposes)--------------------- Synthetic 200 `7 Technical data (2applications) ___________________________ p) Rayon tire fabric (sample) -------------------------------- Soybeans (for human and animal consumption)- _________ 109,339 Chemical speciality compound (sample)__________ __ ___ Reasent chemicals (for laboratory use in study of color 2 changes). Printing apparatus and parts (for use with equipment 60 previously shipped). y Elect on tubeso(to he used by consignee for replacement 411 in television set). Grinding machines (for production of parts for fuel pumps)-. 76, 492 Synthetic resin (used for manufacture of nylon fibers) ------ 1,132, 500 Shoe machines and parts (used in the manufacture of 9,647 shoes). Scientific and professional instruments (for academic re- 540 search use). See footnotes at end of table, p. 656. Bulgaria. Hungary. Cuba. Czechoslovakia. Do. Do. Hungary. Do. U.S.S.R. Poland. U.S.S.R. Rumania. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 654 EXPORT CONTROL ACT OF 1949 Licensing of exports to Soviet bloc countries since extension of Export Control Act of 1949 (approved July 1, 1962)-Continued Aug. 8 Unclassified technical data (f)r foreign filing of paten application). t p) East Germany. Aircraft parts (replacement parts for commercial aircraf t $18, 000 Poland now I. use by Polish airlines--from Norway). Industrial instruments (material to be temporarily shown 371 . Czechoslovakia 9 at BRNO Trade Fair and returned to Austria). Industrial instruments (used for research on metals)_--_ Ch i __ 2,336 - Poland. em cal specialty compound (used to manufacture phar - 1,540 Czechoslovakia maceutical products). Shoe trimming machines (for u;e in the shoe Industry).- G i di h -_ 1, 427 . Hungary. r n ng mac ines (for product on of parts for fuel pumps) Ch i _ 35, 583 Poland. em cal specialty compound; (used to spray molds to 576 Rumania prevent sticking when molding plastics). Raw cotton (original license Is: ued in 3d quarter of 1962 for $53,277). 68,135 . Czechoslovakia. 10 Industrial instruments and pats (to be installed in an 1,664 U.S.S.R acetylene plant being constructed by an Italian firm in U.S.S.R.). Carbon steel tape (used in the production of television tubes). Forklift trucks (for use in potato chip processing and pack- ing plant). 369 13, 365 Poland. U. S.S.R. 13 Steam boiler parts (for use In tl e textile Industry) ------- Automotive replacement parts 'repair parts for commer- cial truck engines previously chipped). Ind'ustrialsewing machine park ------------------------- Physical properties testing and inspecting machines (used for weathering and aging of surface materials). Crude sulfur (for the productior of sulfuric acid) --------- O - 1,896 2,514 - 156 14,440 - 150,500 Rumania. Bulgaria. Czechoslovakia. U.S.S.R Czechoslovakia 14 rganic chemicals (for use in manufacture of paints, Cleaning fluids, and sprays-from Holland). Carbon black (used for manufacture of paints, inks, and 10,200 11 411 . Bulgaria. Czechoslovakia 15 rubber products). Indpstrial sewing machine parts__________________ Automotive replacement parts ( opair parts for passenger cat-frmn Switzerland). Technical data necessary for filir g a patent application--__ S , 480 223 (1) . Do. Bulgaria. Cuba. 16 ynthetic resin (used in the manufacture of plastic prod- ucte). Cellulose acetate (for use in the: nanufacture of synthetic silk). Industrial sowing machines__________________________ _ Cellulose acetate molding and es trusion composition (for use in the manufacture of steoring wheels). Butyl alcohol (for use in the n anufacture of synthetic resins). Capacitors (for use in transistor radios) ------ .----------- 2,140 250 4,800 20,460 11,999 125 U.S.S.R. U.S.S.R. Czechoslovakia.. Do. Do. Do. 17 Power transmission system part; (for use in agricultural m achines). Synthetic resin (used as a samplo and evaluation for use in manufacture of waterpipe). Motion picture studio cquipm, nt and pars (replace- ments for motion picture equipment previously shipped). Ball bearings (replacement part for personal automobile)-- Organic acid (for use as a plasticizer in electrical insula- tion-from tine United ICingdori). Industrial chemicals (used for manufacture of paints and lacquers-from Rolland). Antioxidant (for manufacture of rubber products)--_______ C 114 7 91 9 20 925.932 770,000 Do. Bulgaria. Czechoslovakia. Bulgaria. Hungary. U.S.S.R. U.S.S.R. arbon black (for the nnanufactu; e of rubber products) --- do-------------------------------------------- ------- C 224,100 195,000 Czechoslovakia.. U.S.S.R. 20 arbon black (sample)------------------------------------- Land leveler (used for agricultural purposes-from Canada). Industrial instrument parts (to he used In pulpmill made I in Sweden for the U.S.S.R.-from Sweden). Industrial instrument and parts (10 be used wah pulpmill made in Finland for the U.S.S.R.--from Finland). Industrial instruments and parts (i o he used with pulpmill made in Sweden for Czechoslovakia--from Sweden). Cigar leaf tobacco, unmanufacturcd (from Holland) ------- C t I 2,900 3,290 618 7, 892 27,892 Hungary. U.S.S.R. U.S.S.R. U.S.S.R. Czechoslovakia. Do. 21 ons ruction machinery and parts (for use on Tuloma 1 River hydroelectric powerplant in the U.S.S.R. and for ultimate return to Finland). Organic rubber compounding age its: (for manufacture of ,500,000 151 507 U.S.S.R. U S S R variety of rubber products). Synthetic rubber (for manufacture of variety of rubber products). Synthetic rubber (for manufacture of passenger tires)- S h , 9, 698 190,000 . . . . Czechoslovakia. Do. ynt etic rubber (sample) _____________________ S th i 11 Hungary. yn et c rubber (for manufacture of variety of rubber 4 079 U S S R products). , . . . . See footnotes at end of table, . 656. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R0001001300Q~8 EXPORT CONTROL ACT OF 1949 b extension Export Control I,icensing of exports of 1949Soviet (approved countries July 1 1962) Continued Accelerators (for manufacture of variety of rubber prod. ucts). Coal tar agents (for reclaiming rubber)-------------------- Inspecting machines and parts (for testing strength of textiles-from Italy). Synthetic rubber (for production of a variety of rubber products-from Switzerland). noducts-from Switzerland) specialty compounds (sample)-from Holland- Diamonds suitable for jewelry (sample-to be returned to the United States). Organic chemicals (sample for evaluation) ---------- now aircraft Aircraft ere (replacement airlines). for commercial do --------------------------------- Industrial chemicals (used fort he manufacture of lacquers) _ Scientific and professional instruments (for biological and medical research-2 applications). Aircraft parts (for use in commercial aircraft) ------- Coal _ _ tar products (used for the manufacture of fibers) __ Scientific and professional instruments (for biological and medical research). Indicating recording and/or controlling instruments and parts (for use in air conditioning). Industrial sowing machine parts (not to exceed $1,000 per month for 6 months-from West Germany). $1,800 22 2, 750 203,600 15, 576 4 79 87 289 140 8, 374 9:854 2,621 103,616 5, 450 11,326 6, 000 24 Rayon high-tenacity filament tire cord fabric (for use in the manufacture of tires). Inorganic acids (for use in manufacturing rubber shoe soles). Inorganic acid (sample) ----------------------------------- Organic surface agents (sample) ______s _________ ------ Coal tar products (for use in dyestuff and medieinals)____ Organic rubber compounding agent (sample) _ _ _ _ _ _ _ _ _ _ _ _ _ Coal tar products (sample)-------------------------------- Inorganic acid (sample) --------------------------i Rubber compounding s age tseS(ample) from United Kingdom. -do-------------------- ---------------------------- Carbon black (sample) from United Kingdom -___________ 27 Organic chemicals (used as a pipe-sealing compound)--_____ Industrialsewing machine Parts___________________________ Crude sulfur (used for manufacture of sulfuric acid) --------- 28 Spark plugs (replacement parts for portable chain saw previously shipped). Raw cotton linters (for use in manufacture of synthetic textiles). Cottonseed linters (for manufacture of rayon) -------------- Industrial sowing machine parts___________________________ Technicaldataforpulpmill__________________________ Coal tar products and other cyclic products (for use in the synthetic resin industry). Glycerin (used in manufa cture 0 f ink and paper Coal tar products and other cyclic products (for r manufac- ture of plastics). Coal tar products and other cyclic products (for use as a solvent). Pipe valves and parts (for use in humidity control system) _ 29 Petroleum products (used for lubrication ofmachinery)____ Electric motors and parts (to be used in the processing of lye) . Ball and roller bearings (replacement parts for portable chain saw previously shipped). Gear pumps, hydraulic (replacement parts for machines previously shipped). Machine parts (replacement parts for machines previously shipped). Optical measuring instrument and parts (used for quality control of paprika). Industrial instruments (used for temperature control) ------ Industrial sewing machines_______________________________ Semiconductor parts (replacement parts for movie pro- jector). Industrial manufacturing and service industry machine parts (replacement parts for fiber spraying machine.) See footnotes at end of table, p. 656. Rumania. Hungary. Rumania. Czechoslovakia. Rumania. East Germany. U.S.S.R. U.S.S.R. Poland. Do. Hungary. Czechoslovakia. Poland. U.S.S.R. Czechoslovakia. East Germany. Albania, Bulgaria,. Czechoslovakia, East Germany, Estonia, Hungary, Latvia,. Lithuania, Rumania,. and U.S.S.R. 558,025 U.S.S.R. 650,000 U.S.S.R. 1 U.S.S.R. 1 Czechoslovakia. 105,400 U.S.S.R. 1 Czechoslovakia. 2 Do. 1 U.S.S.R. 18,600 U.S.S.R. 27 Czechoslovakia. 29 IIungary. 18 Do. 117 Do. 61 Ciechoslovakia. 130,500 Do. 45 Rumania. 299, 826 East Germany. 46,295 Do. 443 Czechoslovakia. (1) Rumania. 39,683 Hungary. 25,463 Do. 62,712 Do. 22,500 Do. 1,214 U.S.S.R. 290 Poland. 1,778 Czechoslovakia. 55 Rumania. 233 Czechoslovakia.. 567 Do. 1,833 Bulgaria. 756 Czechoslovakia. 4,434 Do. 107 Poland. 357 Czechoslovakia. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 656 EXPORT CONTROL ACT OF 1949 Licensing of exports to Soviet bloc countries since extension of Export Control Act of 1949 (atproved July 1, 1962)-Continued Date Commolity Value Destination Aug. 29 Petroleum drilling and production equipment parts (re- $5, 652 Poland. placement parts for rotary water well drill rig previously shipped). Technical data for foreign fillni: of a patent application (2 (t) Czechoslovakia. applications). Industrial sewing machines and parts--------------------- 1, 359 Do. Automotive replacement parts (for personal use by mis- 192 Cuba. sionary). do-------------------------- ?-- 139 Do. Technical data necessary for tie foreign filing of patent O Czechoslovakia. applications. -----do---------------------------------------------------- (9 Poland. -----do ----------=------------------------ (') Hungary. 31 Industrial chemicals (for use in the textile and leather in- 29,700 U.S.S.R. dustry). do--------------------------------------------------- 99,000 U.S.S.R. Electron tubes (for personal use by missionary)--------- _ i f ti li T h l d t i 25 1 Cuba. h l ki C n ca a ( or n annea ne)____________________ ec a ni l Metal-cutting machine tool parts (for machines used in ( ) 579 zec os ova a. Do. the automotive Industry). Ball and roller bearings (for machines used in the automo- 798 Do. ttve Industry). Technical data (for runout table for hot rolled steel strip) -_ (1)y( Hungary. Unclassified technical data for ylckling, annealing, clean- (1) Rumania. ing, shearing, sorting, and t nning installation-from United Kingdom. Unclassified technical data for quotation on continuous (1) Czechoslovakia. annealing and galvanizing lines-from Italy. Unclassified technical data for ;hearing and electrolytic (I) Bulgaria. tinning lines-from France. Unclassified technical data for ;.stand continuous billet (1) Hungary. mill-from United Kingdom. Sept. 4 Raw cotton (sample shipment)- -_______________________ 184 Rumania. Industrial chemicals (for use in the manufacture of film 179,250 Czechoslovakia. and lacquers). Electric sealed beams (for use in automotive service)--___- 111 U.S.S.R. Hydraulic brake fluid (for use in. passenger car) from 5 Rumania. Swit'erland. Technical data (used for assembly, erection, and installs- (1) U.S.S.R. tion of power boilers in the pulp and paper industry- from Japan). Automotive replacement parts ('or' use on 2-wheel-drive 72 Poland. passenger car-from Denmark) 5 Synthetic pearl paste (for use In the manufacture of 5,472 Czechoslovakia. buttons). Batteries, dry cell (for use in the :manufacture of watches)- 935 U.S.S.R. Synthetic rubber (for use in the manufacture of rubber- 157,044 Poland. ware). do----------------------------------------------------- 126,093 Do. -----do---------------------------------------------------- 163,437 Do. Industrial sewing machines and parts-from United King- 1,358 Czechoslovakia. dom. Petroleum products (for use in pa senger car) from Switz- 11 Rumania. erland. Automotive fan belts (for use on i-wheel-drive passenger 6 Do. cars) from Switzerland. 6 Geographic world globe (for educe tional use) --------------- 17 Czechoslovakia. Synthetic rubber (sample shipment)______________________ 1 Do. Agricultural machine parts (replac ament parts for ensilage 48 Do. harvester). Paper-converting machinery (for use in converting paper 3,345,250 U.S.S.R. into usable products such as towels, napkins, diapers, and facial tissues). Synthetic resin (sample shipmen; for testing purposes) 20 Rumania. from Austria. Automotive replacement parts (replacement; parts for 265 Do. passenger car) from Switzerland. Mr. LIPSCOMB. To supplement that schedule you are just putting in, could we also make an addit.on to that to show the export licenses granted to Yugoslavia since th3 enactment of the act? Mr. KITCIIIN. Without objiection, we will get that list and include it along with the exhibit. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005 $aT Q RPP6 Og~8? 0100130001-?57 (The information follows:) Value of licenses issued and reexportatiou authorizations granted for shipments to Yugoslavia, July 1-Wept. 13, 1962 EXPORTATIONS AUTHORIZED [Value In dollars] Date Commodity Value Date Commodity Value July 5 Petroleum products ------------ $14,958 Aug, 7 Construction machinery parts-- $6 92 Copper wire and cable__________ 143, 000 Synthetic rubber________ , Electrolytic copper------------- 188,284 9 _______ Video tapes --------------------- 40 2 6 Semiconductors________________ 1,873 Roller bearings --------------- , 37 Construction machinery parts-- 16,085 -- Industrial instruments and Signal generators_______________ 97,198 Parts ------------------------- 2 74 Electrical testing instruments-.. 11,415 Copper wire, insulated --------- , 12 Copper cathodes---------------- 194,448 Semiconductors -------- 36 0 Copper wire and bars ---------- 2,102 -------- ----- do------------ ------- 9 Petroleum drilling and produc- ------ _____do________________________ 23 lion equipment_______________ Construction machinery________ 8,460 14,097 10 __ Construction machinery parts-.. Scientific and professional in- b, 28 Quartz crystal manufactures-.- 131 struments and parts---- - 621 Research laloratory apparatus- 1,170 - ---- Petroleum drilling and produa- Industrial instrument parts---- Semiconductors 120 69 tion equipment parts________ 1,04 ________________ Electron tubes__________________ 253 14 Electron tubes__________________ Waveguide and components_ 30 4 82 Semiconductors____________ __ Electrical testing instruments__ 314 1 180 ___ Communication wire, insu- lated , Electrical testing instrument , _________________________ Petroleum drilling and produc- 9, 29 10 parts------------------------- Industrialinstrument Parts ----- 875 7,610 tion, equipment parts ----____ Roller bearings _____ 13, 28 2 28 Semiconductors________________ Electron tubes 92 225 ____________ Quartz crystals_________________ , 3, 33 13 __________________ - Industrial instruments and 16 Semiconductors_ _______________ 02 parts----------------------?- Copper elevator control cable___ 3, 91 19 - Electrical testing instruments-- 12.22 P urlding wire Petroleum products 4 95 18 19 Electronic computer parts------ Industrial machines and parts 42,360 740 35 15 ------------ Semiconductors___________ 25 a -- Construction machinery parts-.. , 9,099 Centrifugal pumps and parts__ _ Electrodes-- 107,780 22 20 Indu-trial instrument parts____ do - 843 16 ------------- .....' Pipe valve parts ___________ 26 ....- -------------------------- Electron tubes_________________ do_ 2,348 398 237 Electronic physical properties testing, and products testing _ __________ ______________ Electrical testing instrument--- 925 and inspecting machines and parts 2 Synthetic resin-------------- - Electrical testing instrument 359 ------_ Cellulose acetate fllm______-____ 5 220 parts_______________ 1 426 Copper wire, insulated --------- ________ Copper tubing----------------- , 2,319 22 Electron tubes__________________ Capacitors ____________ 111 Electrontubes ----------------- Optical glass------------------- 290 2,979 23 ---------- Physical properties testing equipment 1 853 Video tape_____________________ do 2,798 ____________- tr-- Waveform measuring instru- , --- -------------------------- Construction machinery parts-- 1,272 17,627 ments------------- Physical properties testing 1,254 23 Semiconductors________________ Video recording tape___________ 300 640 24 equipment ------------------- Petroleum products --- 1,25 2 112 Processing vessels______________ Processing vessels and parts 127,264 1 18 100 29 --------- Oil and gas separators and parts- , 1,13 6 24 ---- Aircraft parts___________________ , 120,000 Petroleum drilling and produc- tion equipment parts ------ 1 437 25 Electrical testing instruments-- 6,790 -.. Aerial camera parts_____________ , 5 760 ---- do-------------------------- Petroleum drilling and produc- 10,500 Petroleum products------------ Copper tubing---------------- , 702 2 968 equipment parts --__----- Semiconductors 4,976 219 Sept. 4 -- Copper wire, insulated--------- , 1,855 ________________ do-------------------------- 122 5 Electron tubes__________________ Semiconductors---- 105 89 26 Industrial instrument parts-- _ _ Construction machinery 275 35 575 6 ------------ Industrial instrument parts--.-. El 1,067 27 ________ Electronic physical properties , ectrical testing instruments__ Waveform measuring instru- 1, 845 testing equipment____________ Copper tubing and wire________ 167 46,956 ments________________________ . Electrical testing instrument 2,39C Aug 6 Copper wire and bars__________ Indust i l i t t 1 781 parts_________________________ 275 , r a ns rumen parts----- Construction machinery -------- 498 35,575 10 Electronic computer parts------ 2,344 -----do-------------------------- 20,875 1 Amendment to previously issued license increasing value by the amount indicated. 0 I 0 5? 1 5 0 2 0 1 1 1 9 1 4 5 0 6 4 2 3 s 3 4 0 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 658 Approved FcXB@Wa 0&L 2ojCIA-RDP65B00383R000100130001-8 Value of licenses issued and reevoortation authorizations -granted for shipments to Yugoslavia, Ju!y 1-Sept. 13, 1962-Continued REEXPORTATIONS AUTHORIZED [Value in dollars] Date Commodity Value Date Commodity Value July 9 Industrial instrument parts $933 Aug. 9 Electrical testing instrument (from $$333 10 (from instruments and ctrical testing instrument Ele parts (from Holland) -------- 15,607 (from United Kingdom) ------ 109 Electron tubes (from Switzer- Signal generators (from Switz- 910 land)------------------------- 5,976 erland) ----------------------- Electron tubes and parts (from 375 14 Waveform measuring instru- -- ment (from Holland) 1 560 11 Switzerland) ----------------- Semiconductors (from Switzer- ------- Electrical testing instrument , land) ------------------------ 1 (from Holland.)----------- - 250 25 - Electrical testing instruments 24 Petroleum products (from West 284 (from Holland) --------------- 1,890 Germany) -------------------- Mr. Lipscoiv1B. To clarify the matter, the figures you gave on page 13 of your formal statement as an increase in trade with the Soviet bloc does not include the inert ase in trade with Yugoslavia? Mr. BErrRMMAN. No. Mr. LTPscol 1. You do include in your schedule trade with Poland as part of your increase? Mr. BEHRMAN. Yes. Mr. LlrsCOATB. So if you :nclude Yugoslavia in the Soviet bloc, it would show a considerable increase? Mr. BEriRMTAN. Increase in the volume of trade? Mr. LIPSCOMB. Yes. Mr. BEJIRMAN. I would hale to check the figures. Mr. HOCKERSMITIT. I do not have the exact figures. If I recall cor- rectly, something around $1.4 million. Mr. KITCIUN. As exhibit "D," I would like to put into the record the letter referred to by Dr. Behrman, to me, dated August 16, 1962. (The letter referred to follows:) Exirtnrr D a HE ASSISTANT SECRETARY OF COMMERCE, Washington, D.C., August 16, 1962. Hon. A. PAUL KITCHIN, Chairman, Select committee on E sport Control, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN : This is 'n further response to your letter of July 16 re- questing information on the admi;iistration of the Export Control Act. Our Bureau of International Piograms reported the following : 1. The number of professional personnel in the investigations staff has been increased by six, with two more expected to report soon, and the clerical staff has been increased by one. When personnel actions now underway are complete, this staff will include 23 professional (as compared with 15 on January 1, 1962) and 13 clerical employees. In addition, the Department has submitted to Con- gress a request for supplementary funds for the fiscal year 1963 to further -strengthen our investigative and legal activities, as well as the activities of the Bureau of Customs in the enforcement program. With these additional funds we hope to be able to increase the investigations staff to total of 25 professional and 15 clerical personnel during t qis fiscal year. Once this new personnel has been trained, we will be in a position to develop programs to expand and improve enforcement. One of the programs we plan to undertake is to increase our investigators' direct personal contacts with customs officers in important port cities in order to give them a better understanding of the objectives and techniques of export control investigation and enforcement. This procedure has been tried in Miami since 1.961 with excellent results in im- proving the effectiveness of that office both in detecting and investigating vio- lations. However, lack of personnel up to now has made it impossible to extend the practice to other ports. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005VQ : r %.W0Xq;g900100130001AD 2.. In. cooperation with both, the Bureau of Customs and-the Post Office De- partment, a significantly stepped-up program for the inspection of mail ship- ments at all gateway post offices has been. developed for fiscal year 1963. These Inspections will be conducted by customs officers. 3. We are reviewing with the Department of State the matter of strengthen- ing the investigative and enforcement activities of economic defense officers stationed at diplomatic posts abroad, particularly with regard to improved train- ing programs for officers newly assigned to export control work. Concurrently, we are improving our own use of the Foreign Service by seeing to it that the Foreign Service posts are furnished more background information whenever we request an action and by providing them with more general infor- mation on new developments in our policies and plans. In addition, we have substantially increased the number of export transaction checks on specific proposed or completed exports. Whereas licensing officers sent requests through the Department's Commercial Intelligence Division for a total of 187 such checks in 1961, 258 checks were requested through the Com- mercial Intelligence Division in the first half of 1962. The investigations staff has also started a general survey of all validated and general license shipments to Yugoslavia in recent months to select certain significant shipments for tracing. 4. We are continuing our practice of scrutinizing each application for the bloc from the standpoint of the commodity's possible significance as a prototype. We shall be glad to keep your committee informed of developments along these lines and any new plans or actions that are undertaken. You will be interested, I am sure, to know that the Secretary has denied 112 applications for $43 million of automotive machine tools. After thorough exami- nation at the technical and policy levels, it was decided that exports of this magnitude of advanced machinery could contribpte significantly to military sup- port. Our denial cannot be wholly effective in preventing bloc countries from obtaining such equipment, since similar machines are available in Europe. How- ever, it is our estimate that European producers cannot fill such orders in the near future. The Secretary has also denied several other pending cases in technical data and advanced equipment for the petrochemical and steel industries. He has approved, after very careful examination, a variety of pending cases for materials to be used in manufacturing tires and plastics, and for export of some technical data in steel manufacturing. As to these latter cases, it is clearly evident that the same commodities or information is readily and imme- diately available to the bloc from non-U.S. sources. Sincerely yours, JACK N. BEIIRMAN, International Affairs. Mr. KrrornN. As exhibit E, the letter referred to by Mr. Behr- man, dated August 27, 1962. (Exhibit E referred to follows:) TnH ASSISTANT SECRETARY Os' COMMERCE, Hon. A. PAUL ILIICHIN Washington, D.C., August 27, 1962. , Chairman, Select Committee on Export Control, House of Representatives, Washington, D.C. DEAR MR. KITCHiN : Secretary Hodges has told me of his recent talk with you about certain machine tool applications we recently denied for the Soviet bloc and some other cases we are in the process of approving and denying the bloc. He has asked me to send you more specific information about these cases. Cases referred to by the Secretary are the same cases that I mentioned in the last part of my letter to you of August 16. Of the $43 million of automotive machine tool cases, about $1.8 million were for Czechoslovakia and the balance for the U.S.S.R. They comprised a wide variety of machine tools for automobile factories, including lathes, grinders, roughers, formers, hobbers, lappers, finishers, testers, quenchers, shapers, cutters, gages, and transfer machines. The reasons for our denial of these cases were set forth in the second from the last paragraph of my August 16 letter. They were also stated in our press release of August 18, it copy of which is enclosed. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 660Approved For Rpeleease2 0 0o/05ACT of IA-RPP65B00383R000100130001-8 The approximately 50 cases which the Secretary told you were being approved, and which I referred to in the last paragraph of my August 16 letter, included about $3,800,000 of materials for use in tire making ; namely, carbon black, cer- tain kinds of synthetic rubber, tire fabric, antioxidents, vulcanizing and com- pounding agents, accelerators, s fiber-testing instrument and resorcinol flakes. In addition, there was $125,000 of furfural for use in the manufacture of plastic materials, to solvents, and in the synthetic resins industry. We also approved a license to export technical dat.L necessary to make a quotation and to construct a kraft paper pulpmill, as well as licenses for fluid stream analyzers and re- lated equipment for use in paper and pulpmills, valued at approximately $14,500. Other licenses covered $25,000 of synthetic glycerine for manufacture of ink and paper products and as a plastic. zer in the manufacture of starch and glue, and nearly $350,000 of raw cotton linters for the production of film and rayon textiles. Under our special Polish policy, we approved export of technical data to that country to erect two distillatio i heaters for processing crude oil and residue. Other technical data approved for export to the bloc, as mentioned in my August 16 letter, related to such steel Iianufacturing processing equipment, as : a cold mill installation ; 'a shearing aid electrolytic tinning line ; a continuous heat treatment furnace for incorporating in a tin strip annealing line ; accessory equipment and components for handling hot rolled steel strip ; two continuous annealing and galvanizing lines for steel strips ; and a continuous billet mill. As also stated in my August 16 letter, these commodities and data we have approved are readily and immediately available to the bloc from non-U.S. sources. In addition, they are not deemed significant to the military or economic poten- tial of the bloc in any way that would prove detrimental to our national security and welfare. At the same time we were approving the aforementioned cases, we also.denied a $13,700 order for a type of synthetic rubber which we are in a position to unilaterally control ; an analog computer and gas chromatograph, valued at about $18,000, for use in the bloc's petrochemical industry ; $1,500 of automatic regulators for use in gas distribution systems ; $6,500 of silicone diffusion pump : fluid for use in vacuum pumps ; and technical data for construction of a plant. to produce acrylonitrile fiber. These items were denied because we believe we could make our denials effective, so far as the bloc is concerned, and because they are significantly advanced from a technological standpoint. I trust the foregoing information will be helpful to you and your committee. Sincerely yours, JACK N. BEHRMAN, International Affairs. Mr. KITcmN. A s exhibit F, the press release dated August 18, 1962,, dealing with the denial to the Soviet bloc of the automotive machine tools. (Exhibit F referred to follows:) DxHIBIT F [Press release, U.S. Department of Commerce, Aug. 18, 1962] U.S. AVTOMOTIVEMACHINE TooLs DENIED TO SOVIET BLOC G-62-152 Secretary of Commerce Luther IT. Hodges today announced the Department's denial of approximately $43 million worth of machine tools for shipment to the U.S.S.R. and Czechoslovakia. The denials by the DepartmEnt's Office of Export Control involved 112 export license applications covering machinery for production of automotive components and parts submitted by a numler of U.E. machine tool manufacturers. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R00010013000~1 EXPORT CONTROL ACT OF 1949 The applications had been pending action by the Department for several months while the machinery involved and its advanced capabilities were subjected to intensive scrutiny and analysis, not only by technical experts within the Gov- ernment, but also at top policy levels. The denial action was taken after con- sultation and with the concurrence of the other U.S. departments and agencies who advise the Secretary of Commerce under the Export Control Act. Denial was based largely on the fact that equipment of this magnitude and advanced type would have contributed significantly to the automotive capacity of the bloc. The automotive industry has an important role ip military support. While it is recognized that equipment similar to most of that covered by the license applications is or could be produced and sold by foreign manufacturers, their ability to deliver more than a few units in the near future is limited. Mr. KITCIIIN. Exhibit G, A letter to me as chairman from the Hon- orable Frederick G. Dutton, Assistant Secretary of State, dated July 30,1962. (Exhibit H referred to follows:) JULY 30, 1962. Hon. A. PAUL KI rciIIN, Chairman, Select Committee on Eamport Control, House of Representatives. DEAR MR. CUAIIiMAN : I have received your letter of July 16, 1962, in which you request information on Soviet-Yugoslav trade. With reference to your first question, we regret that the full text of the trade agreement now in effect between Yugoslavia and the U.S.S.R. has not been published and therefore is not available to us. The information presently available to the Department of State consists of press releases by the Yugoslav and Soviet Governments which summarize its provisions. The trade agreement currently in effect was originally signed in March of 1961. It runs until 1965 and provides for a doubling, in the final year of the agreement, of the amount of trade which was carried on between the two coun- tries in 1960. The total amount of trade between Yugoslavia and the Soviet Union in 1960 was $109,614,000. The commodities listed for delivery to the U.S.S.R. in Yugoslav releases are as follows : Cables, lead, ferrous and nonferrous industries products, chemical industry products, various industrial equipment and machinery, footwear, furni- ture, knitted articles of wool, cold-storage installations for commercial firms, food preparation equipment, electrical equipment, universal drying plants, com- plete installations for processing fruit and vegetables, and power transformers. Also called for are 16 tankers of 25,000 gross tons each, 9 tramp steamers of 10,000 tons each, and 3,500 tank cars. Neither quantities of the commodities nor more exact descriptions are given. This basic agreement was modified by the annual protocol to it which was signed on February 15, 1962. It called for an increase in the actual amount of goods exchanged by 30 percent over actual 1961 levels to $120 million. On July 8, 1962, an additional protocol for the years 1903--65 was signed in Moscow by a Yugoslav economic mission. This called for the doubling of 1961 trade volume by 1903, which would bring it to a level of $174 million. This refers to doubling the actual figures for 1961, however, and these are consider- ably less than the planned figures. In fact the volume planned for 1963 in the original 1961 agreement is still in excess of the doubled actual 1961 figures. In this connection it should be pointed out that the planned figures cited in these trade agreements represent, in effect, a maximum upper limit which is almost never reached. The trade agreements must be followed by specific con- tracts which prove difficult to agree upon because of price, quality, and other considerations. Thus, the actual trade figures from year to year have consist- ently been well below planned levels. For example, in the first year of the agreement the value of total trade fell by 9 percent in the face of a planned average increase of 16 percent per annum. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 662 EXPORT JONTROL ACT OF 1949 Commodities specified in the latest protocol are oceangoing ships, rail tank cars, steel' pipe, nonferrous plates, lead, mercury, rubber products, chemicals, furniture, and "other product:,." The "oceangoing ships" are to consist of nine 20,000-ton tankers and five 12,000-ton freighters. This represents a halving of the tanker tonnage and a redaction by one-third in the freight tonnage called for in the original agreement. Delivery is scheduled for 1965, but there is some question whether even these new planned levels will be met since Yugoslav ship- yards have all the hard current;7 business they can handle and the Soviets need larger tankers than the Yugoslav s can produce. A table of Yugoslav exports to the Soviet Union in 1960 and the first 9 months of 1961 (the latest available commodity data) has been compiled and is attached. This may prove useful in supple:nenting the information on the trade agreement- Your second query concerned the bearing which Yugoslav-Soviet trade might have on U.S. aid to Yugoslavia in view of provisions of the Mutual Defense Assistance Control Act of 1951 (Battle Act). There is. no reason to assurie that the recent protocols to the Yugoslav- Soviet trade agreement are int?nded to provide for the delivery by Yugoslavia to the U.S.S.R. of commodities covered by title I of the Battle Act. Although some of the commodity categoi ies are described in broad enough terms that title I Battle Act goods could possibly be included, the pattern of past Yugo- slav trade.with the Soviet bloc and the stage of development of the Yugoslav industries concerned suggest rsther that the exports to the U.S.S.R. do not consist of such strategic commodities. If at any time it should be learned that Yugoslavia is exporting Battle Act title I items to the Soviet bloc any U.S. aid program in existence at that time would, of course, have to be reviewed as required by the act. Finally, you ask whether Yugoslavia, since its break with the Sino-Soviet bloc, has exported Battle Act ccminodities to the bloc. Since reestablishing its independence, Yugoslavia has not exported any Battle Act title I category A items (arms, ammunition, and implements of war and atomic energy materials) to the Sine-Soviet bloc. During 1957 and the first half of 1958, however, Yugoslavia. did make a number of exportations to the Sino-Soviet bloc which apparently included items which at the time appeared on the list of Battle Act title f category B commodities, but which were removed from the list in August of 1958. These shipments included semifinished copper products totaling $5.3 million in value, n ost of which were probably on the category B list in existence at that time. They also included cable valued at approximately $1 million, electric motors and generators, etc., valued at $355,600, machine tools valued at $175,400, and lubricating oils valued at about $260. These latter shipments may or may not: have included Battle Act category B items, but the lack of adequate commocity description make it impossible to determine with any degree of certainty. [n order to insure compliance with the Battle Act, the Administrator brough : all the above-mentioned shipments, with a total value of $6.9 million, to tie attention of the President. On January 9, 1959, after considering the above-mentioned shipments in relation to the pro- visions of section 103(b) of the Battle Act, he directed the continuation of United States assistance to Yigoslavia. The relevant paragraph from the letter of the Battle Act Administrator recommending an exemption for Yugo- slavia is appended as a classified attachment to this letter. The President approved this recommendation with the concurrence of the Departments of Commerce, Defense, State, Tret.sury, and the International Cooperation Ad- ministratiop. Copies of the Pre. idential determination were sent to the Chair- men of the Senate Committeec on Foreign Relations, Armed Services and Appropriations and the House Committees on Foreign Affairs, Appropriations, and Armed Services on January 17, 1959. To the best of our knowledge Yugoslavia has made no other exports of Battle Act title I items to the Sine-Soviet bloc. It is worthy of note that out of the 80 or more exceptions wI ich have been made to the Battle Act Yugo- slavia has been involved in only oae. I hope that this information %ill be useful to the committee. Please do not hesitate to call on me if I can be of further assistance to you. Sincerely yours, Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 663 List of commodities supplied by Yugoslavia to the U.S.S.R., January 1960- September 19611 Maize, unmilled---------------------- _-------- Kilograms 12,462,057 Thousands $716.0 Kilograms 20,462,057 , Thousands $1,174.0 Dried plums___________________________________ 8,247,693 2,240.0 4 005,053 1,068.0 Beans, dry_____________________________________ 1,873,455 315.0 3,108,610 456.0 lops___________________________________________ 884,721 1,245.0 325,112 437.0 Laurel leaves___________________________________ 99,312 19.0 99,931 19.0 Barites, crude__________________________________ 11,991,920 185.0 12 202,600 , 196.0 Barites, ground -------------------------------- 8,600,300 251.0 134,100 7 207.0 Gas oil----------------------------------------- ---------------- ------------ 35,237 1.0 Fuel oil--------------------------------------- ---------------- ------------ 399, 875 6.0 Sodium hydroxide (caustic soda)_______________ 17,000,000 1,317.0 13,000,000 074.0 Sodium carbonate______________________________ 17,240,000 603.0 7,235,900 251.0 Calcium carbide_______________________________ 8,148,935 692.0 6,247,574 530.0 Chestnut extract_______________________________ 698,749 127.0 396,806 65.0 Oil paints-------------------------------------- ---------------- ------------ 499,260 343.0 Maize starch___________________________________ 11,361,100 999.0 7,702,050 677.0 Calf leather____________________________________ 16,310 213.0 878 13.0 Cattle upper leather---------------------------- --------------- ------------ 6 .1 Cattle sole leather______________________________ 811,869 891.0 591,815 604.0 Walnut veneers________________________________ 1,248,124 1,015.0 703,709 568.0 Oak veneers____________________________________ 648,257 384.0 491,940 348.0 Cigarette paper________________________________ 523,402 419.0 228,965 152.0 Knitting yarn---------------------------------- ---------------- ------------ 14 .1 Cotton fabrics, bleached________________________ ---------------- ------------ 113 .2 Cotton fabrics, dyed--------------------------- ---------------- ------------- 356 .7 Cotton fabrics, printed_________________________ ________________ ------------ 87 1 Silk fabrics------------------------------------ ---------------- ----------- 45 .1 Worsted fabrics-------------------------------- ---------------- ------------ 1,021 2.0 Woolen fabrics_________________________________ 305,658 1,538.0 214,653 1,002.0 Rayon fabrics--------------------------------- --- ------------ ------------ 95 .3 Woven fabrics---------------------------------- 50 . 1 137 .2 Silk ribbons------------------------------------ ---------------- ------------ 20 .2 Wool blankets--------------------------------- ---------------- ------------ 73 .1 Bed linen-------------------------------------- ---------------- ------------ 8 .1 Machine woven wool carpets ------------------- 195 .1 160 .1 Ceramic tubes_________________________________ 13,300 1.0 13,300 1.0 Wall and floor tiles_____________________________ 149,900 14.0 174, 690 17.0 Iron and steel rods and bars not containing alloys---------------------------------------- ---------------- ------------ 15,580 1.0 Iron and steel angles, shapes, sections, not con- taining alloys________________________________ 6,992,580 771.0 1,011,480 111.0 Wire rods, not containing alloys________________ 1,600,000 182.0 239, 940 29.0 Copper rods____________________________________ 153,709 206.0 27, 686 26.0 Copper plates---------------------------------- ---------------- ------------ 129,234 127.0 Copper tubes and pipes________________________ 12,847 16.0 Tubes, pipes, plates and sheets of copper alloys_ 28,929 23.0 Castings andiorgingsofcopperalloys__________ 6,267,978 7,445.D 4,885,762 5,213.0 Plates, sheets, strips of aluminum______________ 4,008,602 2,819.0 3,505,339 2,450.0 Rcflnedlead _______---------------------------- 7,683,434 1,547.0 916,566 174.0 Double refined load____________________________ 1,240,000 241.0 160,000 30.0 Welding electrodes_____________________________ 908,000 245.0 1,471,946 364.0 Machines for food preparation and preserva- tion, sugar manufacture, etc__________________ k l d th li id fl T 327,355 663.0 191,701 453.0 ves an qu ow rogu- aps, coc s, va o er lators________________________________________ 7,588 23.0 5,692 18.0 Electric transformers (power) __________________ 1,707,130 1,191.0 507,333 1,191.0 Electrical appliances for home use______________ 100 .2 43,397 94.0 Power cables___________________________________ 12,524,760 6,273.0 10,501,015 4,800.0 Installation material___________________________ 40,818 101.0 73,195 563.0 Installation wire for power current ------------- 1, 637,577 1,306.0 516, 283 563.0 Winding wire__________________________________ 695,183 858.0 372,890 423.0 Low tension cable______________________________ 3,450,044 1,711.0 1,491,037 605.0 Railway containers_____________________________ 14,959,490 5,601.0 13,022,000 4,886.0 Tankers, less than 250 gross tons_______________ i d h t l l ---- _----------- : ------------ 17,858,000 4,360.0 er me p umb ng Sinks, washbasins, an ot a manufacturers________________________________ 15,763 12.0 22.000 9.0 Furniture, unfinished__________________________ 1,200,112 552.0 45,231 20.0 Knitted women's dresses_______________________ 132,813 1,191.0 33,927 361.0 Women's underwear, silk or silken_____________ ________________ ____________ 28 .2 Men's shirts, cotton---------------------------- ---------------- ------------ 3,941 25.0 Men's coats----------------------------------- ---------------- ------------ 5,437 63.0 Women's coats--------------------------------- ---------------- ------------ 1,822 21.0 Other clothing--------------------------------- ---------------- ------------ 400 1.0 Leather overcoats ------------------------------ 24 1.0 10,175 124.0 leather shoes__________________________________ 435,206 2,396.0 82,533 753.0 Movie film, exposed____________________________ 143 149.0 101 54.0 Teaching and documentary films_______________ 14 2.0 22 - 3.0 Publicity films--------------------------------- 39 1.0 20 2.0 Books in national languages____________________ 3,711 10.0 1,142 3.0 See footnote at end of table, p. 664. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 $64 EXPORT CONTROL ACT OF 1949 List of commodities supplied by Yugoslavia to the U.S.S.R., January 1960- Septembsr 1961-Continued Books in foreign languages_____________________ Kilograms 3,369 Thousands $7.0 Kilograms 103 Thousands $2.0 Children's picture books---------------------- 2,175 5.0 6,522 11.0 Postal packages________________________---.--__ 834 1.0 675 1.0 Forel-n ship supplies___________________________ 2.0 (8) 2.0 Table wine in bottles_________________________ 144 .1 ---------------- ------------ Sawn conifer wood____________________________ 35,360 4.0 ---------------- ------------ Sawn oak wood------------------?-_----__-... 2,445,499 301.0 ---------------- ------------ Fine animal hair; carded 50 .1 ---------------- ------------ Mercury ----------------------------------- 11.0, 596 681 -------------- ------------ Oillacquers ----- --- 600,012 432.0 ---------------- ------------ Polyvinyl raw materials t00, 000 175.0 ---------------- ------------ Manufactured leather goods____________________ 52 ---------------- ------------ Dressed furs------------------------------------ 33 ---------------- ------------ Hardwood veneers (unsorted)------------------ 3,690 3.0 ---------------- ------------ Parquet ------------------------------------- -- 3,616 1.0 ---------------- ------------ Canvas covers ______________________________.._ 360 .3 ---------------- ------------ Portland cement ------------------------------- 18,589,893 181.0 ---------------- ------------ Window Qhiss---- -------------------------- __ 360 ---------------- ------------ Ornamental silver____ _______________________.__ 0 ---------------- ------------ Iron and steel concrete reinforcing bars ------ ..__ 6, 246,610 727.0 ---------------- ------------ Iron or steel roofs---------------------------- ..__ 4,660 ---------------- ------------ Iron and steel structures, excluding bridges and roofs ---------------------------------- --- 77,125 25.0 ---------------- ------------ Uninsulated iron and steel cable --_____-___..__ 350 .1 ---------------- ------------ Steel nuts and bolts ------------------------- .-_ 6,000 3.0 ---------------- ------------ Iron and steel household utensils --------------- 400 .1 ---------------- ------------ Metal manufactures, miscellaneous------------- 3,060 2.0 ---------------- ------------ Electric lightin.gtnhes---------------------- -- 1,400 3.0 ---------------- ------------ Telephone equipment _______________________.__ 13,223 71.0 ---------------- ------------ _____________________________ Electric stoves 153 .1 ---------------- ------------ ____ Searchlights------------------------------------ 690 2.0 ---------------- ------------ Motorcycles------------------------------------ 2,052 5.0 ---------------- ------------ Prefabricated buildings------------------------ 8,000 2.0 ---------------- ------------ Ceramic sinks, washbasins and plumbing su)- plies----------------------------------------- 28,000 11.0 ---------------- ------------ Wooden tables______________________________ 250 ---------------- ------------ Office furniture________________________________ 229 .2 ------------ --- ------------ Metalfurniture_____________________________-_- 180 .1 ------------- -- ------------ Men's knitted outerwear_______________________ 38 .3 ---------------- ------------ Phonograph records ____________________________ 11 .1 ---------------- ------------ Journals and periodicals in national language s__ 6 1.0 ---------------- ________________________________ _ Umbrellas 7 .1 ---------------- ------------ ___ _ Electric refrigerators___________________________ 311 .4 ---------------- ------------ Raincoats-------------------------------------- 7,454 63.0 ---------------- ------------ Leather gloves- -------------------------- 247 12.0 ---------------- ------------ Knitted children's dresses______________________ 4 .1 ---------------- ------------ Baskets, knitting______________________________ 782 2.0 ---------------- ------------ Souvenirs-------------------------------------- 1,960 63.0 ---------------- ------------ Miscellaneous for outerwear___________________ 3 .1 ------------ Women's leather ppoy^ketbooks------------------ 2,453 17.0 ---------------- ------------ Easy chairs and chaise longues_________________ 20 ---------------- ------------ Leather suitcases____________________________ 60 ---------------- ------------ Ski boots------------------------------------ --- 15 ---------------- ------------ Briefcases and leather handbags---------------- 30 .3 ---------------- ------------ Total -------------------------------??-- i Sources: Statistika Spoljne Trgovine FN1I Jugoslavije, 1960, and January-September 1961. 2 Value figures, translated from dinars using exchange rate $1=300 dinars. I No weight given. Mr. LIPscoMB. Did I unc.erstand that Yugoslav schedule would also be included as an exhibit? Mr. KITCHIN. Yes. Mr. BEI#RMAN. Of the licenses granted to Yugoslavia since July 1. Mr. LIPSCOMB. What date Would the cutoff be, 10 weeks after July 1? Mr. BEIIRMAN. The first week in September. Mr. KITCHIN. May I suggest, since we want an accurate report, including both the figures as referred to in your formal statement, Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/1-2 CIA-IDP65B00383R00010013000 8 EXPORT CONTROL ACT OF 1949 Al if you would prepare that and' prepare it on the same date and do it for the same period you prepared the other. Mr. LIPscoMB. In other words, referring to your increase, and so forth, on page 13 of your formal statement, your performances will be changed up to date which will include items having been licensed since the 1st of September. Mr. BEIIRMAN. We would be glad to do that, too; update the statement. Mr. KITCHIN. It might be hel ful if you will update the state- ment, not changing yr fi ores ut adding an additional figure for Yu oslavia. Nr. BEHRMAN. As we understand. it, Yugoslavia will be included separately. It is not a member of the Soviet bloc, and we always carry Yugoslavia statistics and licenses separate form the Soviet bloc as far as total figures go. Mr. Slsii. Since Yugoslavia is not a part of the Soviet bloc, any- thing having to do with the Yugoslav situation would have to be set forth as a completely separate figure. Right? Mr. BEHRMAN. We carry it that way, and report it in that fashion. Mr. LIPSCOMB. I think it ought to be in, and we will let the people judge for themselves. Mr. KITCi11N. Without referring to Yugoslavia as part of the bloc you can phrase it in any way you want to-if Yugoslavia is added to the figures, then the percentages would be thus and so, without any inference on your part that it, is your position that the Soviet bloc contains Yugoslavia, that will be fine. Mr. BEHRMAN. We will supply the data.. Mr. LIPSCOMB. I want to be sure that the statement Dr. Behrman has made, in regard to the increase or comparison of licenses granted with other quarters, is going to bring that up to date. Mr. BErllMAN. We will bring it up to date at the end of this week. Mr. LIPSCOMB. There have been some significant licenses granted since the 1st of September. Mr. BEHRMAN. We will be glad to bring it up to the end of this week. Mr. LIPSCOMB. One to Russia alone of over $3 million, that would make a great difference in your percentages. Mr. KITOHIN. Dr. Behrman, we appreciate your submission of this very informative statement. I think you have covered in general the matters that we desired to get into the record and have more information about. There may be some other specific instances we would like to make some inquiries to. We have submitted for the record a list of items that have been licensed for export. In that list there are several items on which there will be one or two inquiries in order to clarify the present policy of the Export Control Division. Will you outline the basis for approving any applications for li- censes to export various types of commodities to the Soviet bloc since July 1, 1962, and reflected in table 1 previously inserted in the record? Of particular concern to me are items approved valued at over $400,000 "for use in locomotives manufactured in Sweden for Hun- gary," or "for use in maintenance and repair of locomotives manu- factured in Denmark and Sweden for Hungary." 77836-62-pt. 3-3 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 666 4?v%VRS,'RRW%$ 2109005/12: CIA-RDP65B00383R - Could not such items be realistically construed as a significant con- tribution to the military and/or economic potential of Communist countries, and logically the entire Soviet bloc? Mr. BEua .N. Mr. Chairman, we have examined fairly carefully, and have continued to examine within the executive branch, the mili- tary support status of transportation in many of its phases. We have felt that the part of transportation which is so closely related to the military that it should be considered more in that category than in the civilian area is aircraft. We have not determined that railroad, or automotive transport, or truck transport is so predominantly military that we would want to classify it in the military support area. Therefore, we have, as you will recall, last year licensed locomotives themselves to a Soviet bloc country. In fact, we did not ship the locomotives; it was too late to get the order. Mr. Krrcmi. That is the application of Bulgaria? Mr. BEHRxAN. An application of Bulgaria of $2.5 million, as I recall, for locomotives. That application concerned locomotives being built by a free world country for shipment into the bloc and the U.S. parts, as I recall, were engines for these locomotives and our companies were bidding in competition with other free world suppliers. It is a case in which, as I indicated in my statement, we found that--and a part of my first statement applies-that this was not a significant contribution to the militaryry potential. It may be a con- tribution to the economic potential and, in fact, it is to their economic growth, as transportation is a growth factor, but it is not one which we could count deterimental to the United States national security or welfare because there was no possibility of preventing the acquisi- tion of these engines nor of the locomotives themselves and the deci- sion as to whether or not they should be U.S. engines made no differ- ence to the technology or performance of those locomotives in the bloc. Therefore, in our estimation the shipment of those parts would not be deterimental to the national security and welfare of the United States. Mr. KrrcmN. Do I understand, then, from your statement, that at least an examination of the facts prior to the issuance of these licenses for the engines for these locomotives, that it was determined by your Department that the sole purpose was a bid for this particular type of engine and a competitive proposition on the part of our local manufacturers rather than a definite type of engine that could not be procured in either Sweden or Norway or wherever these engines were made or in Western Europe ? Mr. Bmrn[ex. That is absolutely correct. Mr. Krrcmw. Referring to your statement concerning your opinion with reference to automotive equipment, locomotives and train equip- ment not being considered strategically a part of the military, we could probably talk a long time on this particular subject. Mr. Bxex. Yes, sir; and we do in the executive. Mr. Krrcnm. However, I understand that is formerly the policy of the Export Control Division and those in authority in the policy- making echelons and now the same policy of the U.S. Government? Mr. EHRxAN. Yes, sir. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001- EXPORT CONTROL ACT OF 1949 66 Mr. KITCHIN. Turning now to page 3 of your formal statement, at the top of the page you say : Our investigation staff is also participating actively in new enforcement pro- grams we are in the process of developing with Customs and the Foreign Service. Does this statement, as prepared and inserted in your second report which has been made a part of the record, does that include in detail those new programs that you have referred to in that paragraph? Mr. BEIIRMAN. It includes part of what is in the Customs chapter of our 60th quarterly report, but we refer also in my statement, Mr. Chair- man, to programs of enforcement and punitive aspects which Customs has agreed to. Mr. KITCHIN. Could you or someone give us a little more detailed information concerning these "new" programs that are being con- sidered? Mr. BNEIRMAN. Mr. Hockersmith will be glad to detail those on the Customs side. Mr. HOC.RERSMITH. First, Mr. Chairman, I would refer to the prob- lem which is developing very fast in the containerization of cargo for export. As you know, there is a trend in the export trade to package goods in large containers made out of metal or wood and they are very securely fastened with steel strappings which makes it extremely difficult for Customs to open and inspect the cargo in such packages at the port and on the pier. The program here, the new program we are instituting with Cus- toms, is to provide a means whereby these containerized packages will be inspected by Customs as- they are packed. We have one pilot operation about to go into operation right now. We will have Customs inspectors go to the containerizing plant and there they will inspect the goods as they go into the package itself before it is sealed. This is one of our programs. The second thing that is being done, there is a trend today more and more for cargo to move by air, originating not only in seaboard ports but throughout inland ports of the United States at airports. We are working with Customs on a. procedure whereby we can inspect these goods at the port of origin, whether it may be New Orleans, Kansas City, St. Louis, Denver, or wherever it might be, and we have a pilot operation also in effect there. We are doing this now in Balti- more at the Friendship Airport. We have Customs people go there and inspect the cargo. It is then loaded, goes through the Port of New York, it is transferred in some cases and in some cases not, and then on out from the United States. These are the two programs upon which we are working, one of which is in operation as a pilot opera- tion and the other is just about to go into operation. Mr. KITCHIN. How and to what extent has this affected your monetary considerations between you and Customs as to the division of appropriations granted to the export control ? Mr. HOCKERSMITII. At the present time we have not increased our contribution to customs work. As I indicated, this is a pilot operation. It undoubtedly will in the future if it is extended-and we see no reason why we can't do this-it will require additional funds, I am sure, for customs purposes. Mr. KITCIIIN. Thank you, Mr. Hockersmith. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 60P proved For Release 2005/05/12 : RI -RP65B00383R000100130001-8 EXPORT CONTROL A T 1949 Mr. Behrman, you referred in your statement, without quoting you verbatim, something about. the lack of funds curtailing the rapid development of the investigations or controls there. Do you intend, in the upcoming budget for next year, to include within that request or the )udget additional funds or what you con- sider to be sufficient fund,; for the increase of control under your jurisdiction? Mr. BEIIRMAN. Yes, sir. As I say, we were seeking after your report and our report on enforcement needs, a supplemental appropriation for this year. In fact, for last year as well. We did dedicate for the last fiscal year additional funds for this purpose as we indicated, out of op r regular budget. A supplemental. of $255,000 which the Budget Bureau approved was sent up. It is because our own general budget has been held up in the Senate and the supplemental has not been brought up either. We haven't the funds wl ich we ourselves requested for increase on the general part, or the sups lemental as of today. Our request for next fiscal year is again substantially increased for both purposes. Mr. LrrscorB. Did you s are with reference to our exports. I am wondering to what extent the Department of Commerce, who in the final analysis is responsible for the final determination, is doing, or can do, or do yon have any comments on the extent to which the American people know about this? They should know whE.t is going on in Government. This is public business and there should be public knowledge. To what extent are we actually trying to enlighten the people of the facts of what our policy is, and what our prime objective is? I am sorry I made such a speech getting to the question. I realize it is an intangible thing. Mr. BEHRMAN. It is a question that has bothered us continuously. We have determined tc handle it in three ways. One, obviously we sho ild not mount any campaign of persuasion to try to bring the public whom we serve into line with what we think is the appropriate policy, or attempt to persuade them of the correct- ness of our view. As you say, we serve t.aem and it is up to the public to decide. We have felt, as you have, that we have not presented the facts, or the situation, as fully a we probably should have done in the past. The story has not been z,c.equately told. We are doing it in three ways, as I say. First, where there aane important transactions, or occurrences, a press release is issued with as full an explanation as we feel we can give. Secondly, we have had in the past several quarterly reports to Con- gress and have included therein a chapter, or a portion, of explana- tion, as in the case of the most recent one on customs, and the previous one on enforcement activities. We!, have selected a phase of our operations for more full explana- tion of what we do, and why we do it. We thereby, over a period of time, will have provided basic in- formation on the justifications of procedures and policies thereunder. Obviously this does not get full circulation. It is a quarterly report to Congress and unless the papers call it to someone's attention, or unless we call it to the attention. of people in speeches, it may not get widespread use, but the information is being produced. Approved For Release 2005/05/12: CIA-RDP65B00383R09 1100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R00010013000~ EXPORT CONTROL ACT OF 1949 Thirdly, probably in every instance in which I give a talk, and most anyone in my area, including at times the Secretary, a discussion of export control policies comes up with businessmen and here we have the opportunity, in fact the responsibility, to explain as fully as we can the policies and procedures. That is being done again for the purpose of answering questions. But there has been no at- tempt, and I do not think we should make an attempt to sell, in a sense, our view of the matter. Again we are responsible to authority, we are not the authority in this matter. Mr. Srsii. I agree with you, of course, on this idea of selling. I do not think we in Government should be attempting to sell the American people anything. I do think to the extent possible we have the responsibility to keep them completely and fairly informed. It seems inconceivable to me that an informed people would continue to criticize a policy which would prohibit shipment to anyone in the world, and I do not care who it is, in the Communist bloc, items that can be bought in practi- cally every country in the world. Having been over in England and France and West Germany and the Scandinavian countries and seen the capacity they have to manufacture the everyday items which are becoming more in use in the world today than ever before, things we have considered neces- sities, to say we should not ship those as long as we can get dollars for them and do something that will enhance our industrial complex and improve our economy, it is inconceivable to me that people would oppose that type of policy. I think it is the most shortsighted policy that could possibly be pursued. As I say, it seems to me it is merely a matter of information to the average person. I am not talking about atomic warheads and things of that sort; I am talking about the everyday commodities which 1 billion people behind the so-called Iron Curtain could use. I believe every American hates communism and what it stands for, but at the same time, when this type of commodity can be bought across the counter in any store across half the world, and we say "no" to our manufacturer, you cannot sell it because it happens to be going. to this particular country, I just feel it is a foolhardy policy, and if we'could get the information to the people as to what our prime objectives are, in a straight across-the-board competitive situation W U UULUU UVZLL tlI m, cvvuvuuvwii, - ... --------- That is the point of my question, and not one of attempting to sell these theories. I do believe this strongly. I realize there is a lot of emotionalism in this issue and perhaps I should not say this, but I have said this in my district, and I believe it very fervently, and I have said it in a national article. I have come to the conclusion that, unfortu- nately, there are a lot of people who actually do not understand our prime objectives in this cold war. That is all I have. Mr. KiTCnrx. I feel constrained to make a statement in connection with that particular speech that has just been made, more to clarify my position in the matter than to argue with the gentleman from California. I am sure he did not mean that he believes we should lift the embargo on Communist China and institute and open and 77836-62-pt. 3-4 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 682`pproved ForRelease 2005/05/12: CIA-RDP65B00383R000100130001-8 PORT CONTROL ACT OF 1949 wholesale negotiation of trade with the Communist China Govern- ment. I will let him answer that: or himself. Mr. SISK. The gentleman knows if I made any statement that indi- cated that Mr. KITciriN. I thought i ~ needed clarifying because I thought your statement; was sort of all-emlaracing, that any American of intelligence that would disagree with the= philosophy of trading where items were available from other source;,.those items outside the military weap- ons Mr. Sisi. I might clarify. My statement went to, and was based completely within the bounds of our present policy, which. of course, as the gentleman knows, is one of total embargo on Communist China, Cuba, North Korea, and North Vietnam. What I am saying is basically in total defense of our present policy. I think in fact with the pressures of misunderstanding people, we may be too rigid in the enforcern~mt of our licensing procedures. That is why I asked the question alJout the $40 million worth of equipment. Maybe it should have been shipped, maybe not. If it would enhance the military and the econora c well-being of the Communist bloc over anything we would receive, I think they were correct in turning it down. My statement stands with reference to our present policy. I am talking only of our present pc licies. Mr. KITCIHN. I made my statement in order to clarify that point. I am glad the gentleman Trnm California has clarified his position. Mr. SISK. I appreciate the gentleman giving me that opportunity. Mr. KITCHIN. I want to a.c.d, this committee had no wish to impede the competitive efforts of any American enterprise in vying with any country for foreign trade. I am not, as chairman of this committee, married to any idea of try- ing to stifle, or impede, any grade and commerce between our Nation and other nations of the world so long as it does not affect our cold war effortsi with such countries. I think in connection with the gentleman from California's opinions, that he has just expressed, though we may differ slightly in philosophy, I want to say it is my interpretation of the responsibilities of this com- mittee that we in no way desir3 to impede our trade. Mr. LIPscOMB. We are also interested to the best of our abilit to see that the policy followed by the administration conforms with this laws that are on the statute books passed by Congress. Dr. Behrman, did you and your associates read, study, and analyze the debates of both the house and Senate which would include when the bill was on the floor, in cor: ference, to determine the feeling of Con- gress representing the American people when this law was passed in regard to trade with the Soviet. bloc? Mr. BEIIuMAN. I did not read. every word in these debates. I have read portions of them which my own counsel particularly pointed out, and others as I could. But t:lose who are sitting with me, and some who are not here, did read all of those, and we discussed them care- fully; yes, sir. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R0001001300BA58 EXPORT CONTROL ACT OF 194 Mr. LIrSCOMB. And also checked the significant rollcalls pertaining to the actions taken? Mr. BEIIRMAN. Yes, sir. Mr. LirscoaiB. Following the passage of Public Law 87-515 as amended, how many meetings and discussions, if any, were held among representatives of the Departments of Commerce, State, De- fense, and other agencies to discuss this legislation and its meaning and significance, and by this I mean formal meetings and discussions and not just meetings that happened to occur in connection with ad- ministering the Export Control Act in regard to the approval or denial of applications? Mr. BEIIRMAN. Not with reference to the approval or denial of ap- plications, or specifically with reference to those as well. Mr. LIPSCOMB. My thought is : How many formal meetings were had with all the agencies in setting up the policy, the principles, on export controls ? Mr. BEIIRMAN. I can think of a half dozen in which I was in attend- ance. I would like to let the rest speak for themselves. The ones that I attended were obviously concerned directly with the interpretation of the act and the way in which that would affect our procedures and how we would implement the act. The others would be largely on the application of those interpreta- tions as developed within the administration in the specific cases. Mr. LnPscoMB. The statement you made before the committee yes- terday as it pertains to policy is now the complete policy of the ad- ministration as agreed to by Commerce, State, and Defense? Mr. BEIIRMAN. Insofar as it applies to those portions of the act which are our primary responsibility, as I indicated yesterday; yes, sir. Mr. LIPSCOMB. The Federal Register of September 11 contains an amendment to the export regulations on licensing policy setting forth essentially what the amendment to the Export Control Act was as contained in section 4 of Public Law 515? Inasmuch as this measure was signed July 1, 1962, what was the reason for the delay? Mr. BEIIRMAN. I cannot speak for the delay between the time it was decided within the administration to handle it in that particular fashion and the publication in the Federal Register. I do not know what the procedures are of getting it in the Federal Register, and so on. It was less than 2 weeks then within the administration that the various discussions had been held for determination of how we should in fact implement that portion of the act. So within 10 days of the act we had an administration policy on the implementation. Why it took from then on to get it in the Federal Register, I cannot speak to. Mr. LIPSOOMB. Would you say that the publishing of this policy in the Federal Register indicates a general intent to tighten policy on exports to the Soviet bloc? Mr. BEHRMAN. In terms of a higher degree of denials of the same sort of applications that we had previously, I would say not neces- sarily. It does mean, as I explained yesterday, Mr. Lipscomb, a dif- ferent type of scrutiny, a more careful assessment of the economic area and the detriment which may arise to the national welfare and security of the United States, but unless I know what applications are forth- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 6p proved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 coming,, and what area t.h y would be in, I could not say our denial percentage would rise necessarily. Mr. LiPSCOMB. Would you say that the policy you are working on now is basically the same as you have stated before this committee since last December and al,>o stated before the Banking and Currency Committee earlier this year? Mr. BEHFMAN. As I exp tained in that testimony, Mr. Lipscomb, we felt we were already taking into account largely what the committees were concerned about in the economic field-as we so stated I think in our letters to the chairram concerning the matter. When?you talk about "basically" you are not talking about, the fine points around the edges, but basically the policy is the same. Mr. LIPSCOMB. All that. we went, through in amending this law to: include economic factors, the debate on the House floor, the Senate floor, the conference report and all the rest has not made any differ- ence in the administration o:F the policy of this act? Mr. BEHIIMAN. It is a di_Terent question, Mr. Lipscomb, from what you asked a minute ago about "basically." "Basically" is a. funda- mental base upon which you operate and there are nuances above and around it. I would not say it makes no difference. It has made a dif- ference, as I say, in the way in which we look at thin s th ddi i l g , e a t ona facts we may require, finding the economic potential and so on. Mr. LIPSOOMB. Could you give a specific example from July 1, 1962, where it has made a difference? Mr. BEHRMAN. As to wh ether or not we would have denied some- thing under the previous policy and approved it under this or vice: versa I cannot because we don't examine it under the previous criteria and under these criteria and say, "We would have done it then and we would not do it now," or vice versa. The largest single example of course is that of the machine tools themselves whereby in the 1 ght of the new act we saw it quite clearly and definitely, that a denial of these was appropriate under the new act. Mr. LIPSCOMB. Are you saying 'if the act hadn't been amended you miht have allowed those shipments? 11 - was not as clear necessarily as trader this one. But that does not mean we would have allowed there. Mr. KITCIIIN. If the gentaeman will yield there I think the record will speak for itself that thee,T had allowed licenses for such equipment prior, to the amendment of t6 -1 act. Mr. BEJIR1MMAN. Such cases were approved in 1960, as I recall, Mr. Chairman. Mr. KITCIIIN. I am going to inject a statement here and say that I hope the amendment of the act had something to do with the denials. Mr. BEIIRMAN. Undoubtedly it had something to do with it, Mr. Chairman. Mr. LIPSCOMB. While we are discussing that $43 million order, pre- viously a license was issued authorizing shipment of $5.3 million license for automobile-making machinery which began the whole episode. At the outset the Department of Defense was asked about it and described this machinery as the most advanced in the world. The Department of Defense said it would contribute significantly to the economic and military potential of the U.S.S.R. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 202 Wl2 q,&IRD,?5gg0?p 0001001300%1 The Defense Department decision was later rescinded by Secretary McNamara on the basis that substantially similar machinery could be purchased in Europe, and it was claimed that the fact the earlier delivery was possible from the U.S. source was of minor importance. Just to get all of this in the record at this point, what were the reasons for denying the licenses to ship $43 million in automotive building machinery to the U.S.S.R.? Mr. BEiimMAN. As stated fairly simply in the press release on the matter, Mr. Lipscomb, the denial is largely based on the magnitude, the total order. The fact that they were of advanced types would have contributed to the automotive capacity of the industry in the Soviet bloc and that orders of such magnitudes could not be filled, we felt, in the very near future by competitive sources. Also it is correct that most of these machines are quite similar, if not identical to that available in other countries. Mr. LrrscoMB. You also used as a reason for refusal that they could not obtain this machinery as rapidly from other producers as from the U.S. Government. Mr. BEHrMAN. That is correct. I think I stated that just now. Mr. LrrscoMB. How did the Commerce Department go about obtain- ing the additional information and data upon which it based its deci- sion to deny the licenses? Mr. BEHHMAN. I don't know, Mr. Lipscomb, that there was addi- tiona]. data sought at any given time-that we are satisfied now and then obtained additional data. We in fact were holding these licenses for some time and were continuously requiring additional informa- tion as to the availabilities in other countries and each time an appli- cation came in you dot additional data, not only on that one but on the fact of the magnitude of the order. Mr. LrrscoMB. Did the Department hold any conferences in regard to this revised decision with Secretary McNamara or the Department of State? Mr. BEHRMAN. Yes, sir. Mr. LrrscoMB. And Secretary McNamara revised his position? Mr. BEHRMAN. No, sir I don't think the decision was a, revision of a previous decision. That was based on one machine at a particular time, of a given capacity. What we were now making a decision on was the variety of machines, a considerably different magnitude, a considerably different impact on the automotive industry. Mr. LrrscoMB. Are there any applications for licenses to ship. sim- ilar machines now pending before the Department? Mr. BEHRIAIAN. I don't happen to know that. Mr. HocKErsMZTH. I don't believe so, Mr. Lipscomb. I can't say definitely but so far as I know there are none. Mr. LrrscoMB. You make a very interesting point, Mr. Behrman. You talk about magnitude.- If these applications come in, say, at only $5 million at a time you grant the license because the magnitude is not great. And then after this shipment is made and a machine tool manufacturer comes in with another one, how are you going to judge this as to economic potential? Mr. BEHRMAN. Well, unfortunately, because of the inadequacies of the human mind and foreknowledge, I can't say how we are going to handle it. I will say we are handling this problem daily, weekly, with a variety of items. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 proved For Release 2005/05/12 :CIA-RDP65BOO383R000100130001-8 Let's take a raw materi,i.l of some sort. We may be fairly uncon- cerned with $5,000 worth, or 5,000 pounds shipped from the United States, knowing how much their production is and their total demands and needs. But if 5,000 comes in this month and the next month and the next month and the neat month, there is a point at which we stick, if this is an item of interest to us in terms of economic potential.. Mr. LIPSCOMB. Well, when are you going to come to a decision as to when the buildup is so great that it is going to affect the security and welfare: of our country? When is this decision going to be made, after the horse has been stolen ? Mr. BEHRMAN. The decision has to be made in the light of the cOndi- tions at the time, Mr. Li-.bscomb. As was pointed out, as we have pointed! out in the past, this whole problem is a matter of relative position; benefit to us as compared to the cost to us, or the benefit to them. I dare say that a decision made in 1958 as to what should be the cutoff on certain things, the strategic element content of certain things-would not stand today. In fact the revision of our own stockpile is an evidence of the changing nature of strategic benefit, economic or military, after all, of a good many items. Mr. LIPSCOMB. We hav) discussed rubber in this committee ever since it was formed. Ti:ccs and rubber goods have been a problem in export control at least bask to 1958 and at the present time you are continuing to allow to be 'ii.,ensed for export to the Soviet bloc all kinds of synthetic rubber, all kinds of chemicals, materials to make tires and other rubber products-- Mr. BEHRMAN. No, sir, not all kinds. Only certain kinds. Mr. LIPSCOMB. Well, Dr. Behrman, you by the licensing of certain materials for the manufacture of tires and rubber products, in my opinion, are helping to build up the capacity of the industry in the U.S.S.R. and I lust hope that you are taking a good look at these be- cause all you have to do is look ,it the export licenses approved and you will find materials going to the Soviet bloc for their rubber in- dustry in great amounts. Now,, you might by your statement indicate that you are holding up some but it is very few and very highly technical goods. Mr. BETIRMAN. That is,,orrect, sir. We are mostly concerned with the highly technically advanced goods that would in fact increase their potential value substantially. Mr. LIPSCOMB. Just on the basis of the wheeled goods going into Russia that need tires and other materials it seems to me we ought to take a strong stand on building up the rubber industry of the U.S.S.R. who are taking those materials, without a doubt putting them on vehicles that are being shipped to countries such as Cuba. I think it is time we took a strong stand in regard to an item such as this. Mr. BEIIRMAN. Once again, Mr. Lipscomb, the items which we are sending are again on a c)mpet.itive basis. They are not of such a high grade or high quality as to be desirable for military use. Mr. LIPSCOMB. Well, c r.y kind of material you send to Russia to improve their tire industry is a help to them. You well know of the situation of the tire industry in the Soviet Union. Mr. BEHRMAN. What we are sending is not to improve but to con- tinue the level of their o ?oduction of types of things they are now Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12: CIA-RDP65B00383R00010001-8 EXPORT CONTROL ACT OF 1949 doing. Even technical data which we do not ship them is available to them and has been given them by other countries so that they are able to improve without our being able to stop them. Mr. LIPscoMB. Let's take the initiative in not only stopping some of this but telling our allies who ship this kind of material to them to stop also. Let's take an aggressive attitude toward this instead of what I consider a weak attitude. Mr. BEHRMAN. As to the ability to persuade the allies, Mr. Lips- comb, I will have to defer to the State Department since they have tried at various times. We have had another Cocom review recently this year and with some success. Mr. LzrscoMB. Dr. Behrman, in the Export Control report you dis- cussed each quarter licensing to Eastern Europe. And then as a footnote it says: The term "Eastern Europe" as used throughout this report is employed in a special sense and is defined to include the following countries : Albania, Bulgaria, Czechoslavakia, East Germany (including the Soviet sector of Berlin), Estonia, Hungary, Latvia and Finland, Poland (including Danzig) and the U.S.S.R. Now why is it that Yugoslavia is not listed as a European country ? Mr. BEHRMAN. It is a European country but not included in the term "Eastern Europe" which in these terms "control" means the Soviet bloc and not merely those countries in Eastern Europe in a geographic sense. Mr. LzrscoMB. In other sections of the report you say : All positive list commodities and all nonpositive list goods except certain specified general license commodities require validated licenses for shipment to the U.S.S.R. and other Eastern European nations other than Poland and Yugoslavia. Mr. BEHRMAN. That is correct, sir. Mr. LzrscoMB. Is there any reason that you couldn't in this positive list include Yugoslavia, or is there some reason that you do not want to show Yugoslavian shipments in Eastern Europe? Mr. BEHRMAN. Yes, sir, there is a reason for not including Yugo- slavia in those statistics because Yugoslavia is not treated in our license criteria as a member of the bloc and therefore it does not have the same constraints or restraints on licensing as to the bloc. It shares the criteria of all the rest of the free world and is subject to the positive list just as all the rest of the free world is. But not as the Soviet bloc or Eastern Europe as defined in the footnote on page 4 as you indicated. Therefore, there is not a policy reason or informational reason for including Yugoslavia in those same ship- ments. Mr. LzrscoMB. Why don't you just head that, then, "Licensing to the Soviet bloc"? Mr. BEHRMAN. Well, not everyone knows what the Soviet bloc is by definition. For reasons which may have a historical justification I don't know of, this has been the practice in the Office of Export Control for sometime. It is simply a matter of definition. Mr. HocKERSMITH. It is a matter of definition, purely and simply. Mr. LzrscoMB. It just seems to be an effort to keep licenses issued to Yugoslavia out of any public print or out of the knowledge of the American people. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Ap moved For Release 2005/05/12: CIA-RDP65B00383R000100130001-8 Mr. BF.HRMAN. Net at all, sir. We do not compile shipments to France, for example, We do not compile shipments to Chile or any other place in the free world. Mr. LIPSCOMB. Of course I don't consider France a Communist country. Mr. BEHRMAN. That is correct, sir. Neither do we. We consider Yugoslavia a Communist country but not a member of the Soviet bloc. It 'was not, in fact, until the request was made seine time last year, as I recall it, we began to make Yugoslavian statistics available. We had to start compiling them de novo. We had not previously done so. Mr. LIPSCOMB. Dr. Behrman, in a news release dated July 9 crigi- nating in Moscow, there is indication that Yugoslavian shipyards have agreed to construct nine tankers and five freighters for the U.S.S.R. have we any way c f knowing with certainty whether or not any of the goods licensed for export to Yugoslavia such as copper wire, cable an nad tubing, industrial instruments, electronic tubes, generators, indus- trial machines, and other items could be used in the construction of these ships? Mr. BEHRMAN. Certainly we know whether they could be used in the construction of those ships. Mr. LIPSCOMB. Would the Department consider the acquisition of 14 ships, for example, something which would contribute to the eco- nomic and military potential of the U.S.S.R.? Mr. BEHRMAN. We would have to go through our procedures to answer that question, Mr. Lipscomb, but I can do it probably in a somewhat circuitous manner. Yugoslavia is not the only one supply- ingships to the Soviet bloc. Mr. LIPSCOMB. That is no answer, Dr. Behrman. Mr. BEIIRMAN. It is an answer, if we go on to say, Mr. Lipscomb, that Japan and some of the Scandinavian countries have been build- ing, ships for Russia, We ship to these countries. We ship to them many of the items that you are talking about. Whether or not they go into those particr;l r,r tankers or ships to the Soviet bloc we don't know. Whether if we wanted to deny their going in we have the right to do so, but I daj e say we would take no more caution about their going into a Yugoslavian ship than we would a British ship.or a Norwegian ship. Mr. Srsiz. Will my colleague yield? Mr. LIPSCOMB. I would just like to finish this, Mr. Sisk. We don't agree, Mr. Sisk, on our policy. I understand that. Mr. SISA. I am not going to argue the question but I don't think the Department of Co nmerce is making the policy with reference to who is in the Soviet bloc and who isn't. That is a State DepartrrLent task. These people are not responsible for the fact that Yugoslavia is considered a part of the free world today and therefore, to me, I think it is beside the point and superfluous to even discuss the matter. Mr. LIPSCOMB. Maybe you missed the point, but as I read that news- paper article Yugoslavia was going to build these ships for the U.S.S.R. Mr. Slsii. Scandinavia is building ships for the U.S.S.R. Mr. LIPSCOMB. We are talking about Yugoslavia. Mr. Sisx. Shall we stop shipping to Sweden and Norway because of it? Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/, : 0~ AIA D~ qFg399383R000100 X01-8 CO EXPORT Mr. KITCHIN. May we have a little order, and question Dr. Behr- man and his group. We can set forth our own philosophies on the floor of the House. Mr. LIPSCOMB. I believe, you see, that the law means exactly what it says at the present time, that anything that significantly increases the military or economic potential of the Soviet bloc, that we should restrict the export of that material. It is my understanding by reading material from various shipbuilders and marine engineers that they feel in our country that Russia will bury us at sea and they are going all out to attain vessels for this purpose. Now does it come within your jurisdiction to see to it that exports are restricted which will help significantly to build up the maritime service of the Soviet Union? Mr. BEHRMAN. To the extent those exports originated in the United States and contributed significantly and were considered detrimental to the welfare and security of the United States, that is within our jurisdiction; yes, sir. Mr. LI 'seoMB. Do you believe inasmuch as licenses to Yugoslavia hake been approved up to the present time that it is time that we should look at the exports going to Yugoslavia that may go into ships being constructed to build up the maritime service of the U.S.S.R.? Mr. BEHRMAN. We have done so, we do do so, and we have at times refused to permit certain equipment from the United States to go into ships and airplanes produced by other countries than Yugoslavia and certainly we would make such an examination with reference to Yugoslavia. Mr. LIPSCOMB. Inasmuch as you are the Administrator of the Ex- port Control Act and that we have a problem with policy, there is a report in the New York Times of this morning, September 14, a UP release that says : "The United States is attempting by gradual means to establish closer ties with Soviet bloc countries in Eastern Europe," a State Department spokesman said today. William R. Tyler, Assistant Secretary of State for European Affairs, made the statement in testimony before the European Subcommittee of the House Coin- mittee an Foreign Affairs. "This included maintaining and developing more normal and active relations with Eastern European bloc countries and with some limitation, increasing trade," he said. He explained, "We believe the United States can most effectively exert an influence on developments and take advantage of any favorable and liberalizing trends in Eastern Europe if the scope of relations with these countries is broad enough." Are you working under the policy at the present time of broaden- ing trade with Eastern European countries? Mr. BEHRMAN. May I indicate the section of the act which I think Mr. Tyler was referring to, although I think you should pursue in detail the questioning with him. This is Section 2-Declaration. of Policy of the act, Mr. Lipscomb : Congress further declares that it is the policy of the United States to formulate, reformulate and apply such controls to the maximum extent possible in coopera- tion with all nations, with which the United States has definite commitments- And I stress the following : and to formulate a unified commercial and trading policy to be observed by the non-Communist-dominated nations or areas in their dealings with the Com- munist-dominanted countries. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Ap yed For Relea qq5// ? CIA-RDP65B00383R000100130001-8 OL ACT OF 1949 The next paragraph is also significant : Congress further declf.res that it is the policy of the United States to use its economic resources and advantages in trade with communist-dominated na- tions to further the national security and foreign policy objectives of the United States. The word "use," of economic resources and advantages in trade is not. a negative word, Mgr. Lipscomb, and it is in this area of expanding our economic relationships with them to the advantage of the :West which Mr. Tyler is re:lerring to I am sure, and we have so interpreted this intent of CongrEs3 after a careful reading of the congressional de- bates. We do not seE that that trade which we carry out should be permitted to be carried out in. ways which in fact minimize the bene- fit to us even though it. may be greater than whatever detriment might arise. Mr. Lrr'sCGMB. Dr, Behrma.n, we have probably covered this over the past month but who actually sets the policy in export control af- fairs? Is it Secretary Hodges, Secretary McNamara, Secretary Rusk, the Treasury Department? Who has responsibility in the final say? Mr. BEIRMAN. The ultimate say obviously, Mr. Lipscomb, is the President's. The procedure is through the National Security Council. Mr. Ln scoMB. And m,ny policy that you operate under is determined by the President at the and? Mr. BEHRMAN. With the advice of the National Security Council. Mr. LirscoMB. So the policy that you have set forth here in the past 2 days is finally deter pined by the President as you stated in your statement yesterday? Mr. BEHRMAN. Yes, sir. Mr. LirscoMB. Mr. Sisk interests me in his statements about goods that they can buy any place in the world, and helping the Communist people. On. September 6 yon licensed for export to the Soviet Union paper converting machinery -valued at $3,345,000. As I understand it, the purpose of this paper converting machinery was for paper napkins, cups, things of that sort ; is that correct ? Mr. HocI(ERsmiTH. I think that is correct. Mr. LrrscoME. Now why is ii, I mean going to the ultimate of Mr. Sisk 's policy, where we are benefiting the industry in the United States. Why isn't it that the Soviet Union doesn't come to the United States and buy the best paper napkins, toilet paper and other products that exist in the work( today? Why don't they buy them instead of buying the machinery? Mr. BEHRMAN. We would of course in many instances prefer that they do that, Mr. Lipscomb. We have talked at length with some of their people to see if we cannot expand our trade in consumer items. But just as w,i in the United States, Mr. Lipscomb, sought to increase our own industrial base for further economic growth it is the desire of any other country to do the same. If they can in fact build industry which will supply their consumer needs, reduce their dependence on others, i acrease their employment and diversification they will do so. We ace the same phenomena in the less developed countries today. I don't count this as anything unusual or different in terms of economic dkvelopment throughout the world. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release%WOP~ ,R(ftIA, PA50QQ383R00010018bb01-8 Mr. LIPscoMB. I just thought it would help our industry here and help them get their products faster if. you suggested to them that you won't send the machinery but you will sell them all the paper goods they want. Mr. BEIIRMAN. We have suggested that in various ways but ob- viously if they are bent on getting the machinery they will purchase it from Britain or France or Germany. . Mr. LIPSCOMB. I mean history to this date shows that they are not interested in our consumer goods? Mr. BEHRMAN. This is largely our feeling; yes, sir. Mr. LIPscoMB. Mr. Behrman, I suppose you know that I am per- sonally disappointed in the way the Export Control Act is interpreted as passed by Congress. I don't see any change, any strengthening, any more firmness in the policy. It appears to me that there is no effort made to tighten up and to evaluate this, at least in the way I see it. I just hope at some time in the very close future there will be a little more firmness in the administration of the Export Control Act. I notice the difference of opinion here but I take the position of firmness and tightening up and fighting this cold war economically and not in the way that we are doing it today. Mr. BEmiMAN. I hope you will find, Mr. Lipscomb, that where we have effective control and the item itself would be contributing signifi- cantl to the military or economic tote United States, th at we will in potential, fact i be as firm as you expect us to be. Mr. LIPscoMB. Speaking just to that point I think it is a very weak position to say that we have to sell the equipment from this country just because they can get it from a Western European country. Mr. BEHIP.MAN. I don't think, sir, that we are saying we have to do it. The point is the reduction of damage to ourselves when we keep it from being shipped from here rather than from a European country. That is the detriment with which we are most concerned. Mr. LIPSCOMn. That is his opinion, not mine. I am through. Thank you, Mr. Chairman. Mr. KITCHIN. Mr. Latta. Mr. LATTA. Thank you, Mr. Chairman. Mr. Behrman, how many times has the Export Control Review Board met since the middle of last year? Mr. BErIRMAN. The middle of this year or the middle of last year? Mr. LATTA. Pardon me. The middle of this year. Mr. BEHrMAN. To my knowledge once. Mr. LATTA. And on what particular application did they meet? Mr. BEHEMAN. On many of the applications which were decided in a group and amounts, and some additional ones on the total inter- pretation of the act. Mr. LATTA. Can you be more specific and tell us what application or applications you referred to the Export Control Review Board and upon which they had a formal meeting and when the meeting was held? Mr. BEFIRMAN. In view of the nature of those decisions and the items themselves, Mr. Latta, I would prefer not to detail what those items were. Obviously, the decision which was announced in the press Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Apff2ved For Relep 558N5/12 : CIA-RDP65B00383R000100130001-8 TROL ACT OF 1949 release of August 18 would have come before the Board and did. Some additional items did come before it and obviously the meeting was just prior to the press release. Mr. LATTA. So it is clasisfied information to this committee, but it is public information ;o, the press : Is that what you are telling us ? Mr. BEHRMAN. Nc, sir. I am saying that the number and particu- lar cases which came 0 the Export Control Review Board I wouldn't mind supplying you on a confidential basis. Mr. LATTA. And that has not already been supplied at yesterday's hearings ? Mr.13ETIRMAN. It was not supplied in public. Mr. LATTA. What countries were involved, can you tell us that? Mr. BEIIRMAN. A variety of countries in the bloc. Three or four I think-Russia, Czechoslovakia, Hungary, and Poland. Mr. KITCHIN. Does the gentleman want that supplied for the benefit of the committee ? Mr. LATTA. Yes; I think that would be helpful. Mr. KiTomN. Will you supply that on a confidential basis? Mr. BEHRMAN. Yes, Mr. Chairman. (The information re:Ferred to will be found in the files of the Select Committee on Export Control.) Mr. LATTA. Prior to the 18th what was the date of the previous meeting ? Mr. BEHRMAN. I do n of recall. Mr. LATTA. Is it a matter of months, days, or weeks prior to that time? I am trying to ascertain how many times or how often during the year this Export Control Review Board might meet on subjects that you refer to them. Mr. BEHRMAN. Mr. Latta, in my recollection just offhand I would say in the calendar year 1962 there were probably three meetings including the one that you are talking about. Mr. LATTA. Including the August 18 meeting? Mr. BEHRMAN. Yes. Mr. LATTA. That is all in 1962. About how many meetings were held since its creation on about May 24,1961 ? Mr. BEHRMAN. About another three. Mr. LATTA. Altogether they have held about six meetings? Mr. BEa-IRMAN. I think so, but let me point out the existence of the Export Control Review Board is for the purpose of resolving differ- ences of opinion among the departments which exist at lower levels and therefore this is not a continuing board but a board of highest resolution and it was not created for the purpose of meeting except on rare occasions. Mr. LATTA. I know, but a good bit of the publicity and importance was attached to the creation of this Export Control Review Board when it was created by Executive order. Mr. BEHRMAN. That is correct, sir. Mr. LATTA. So it shoulci't be treated lightly and should be used. Mr. BEHRMAN. It is not treated lightly and the reason for that Executive order and the, existence of the order is to indicate to those levels below that there is a final resolution and there should be Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12: CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 693 unanimity as much as possible coming up. If it cannot be unanimous, however, there will be a place of resolution. Mr. LATTA. To be more specific, one of the reasons for the creation of the Board was to ascertain and establish export control policy. Mr. BEIIRMAN. No, sir; not in the broadest sense. In a specific sense, yes. Mr. LATTA. Let me read for the record. Perhaps I am in error. It says: This Board is responsible for review of all matters relating to the establish- ment of export control policies and export licensing actions which have been the subject of divergent viewpoints in the lower level committee structure. Mr. BEIIRMAN. That is right. Mr. LATTA. Now, am I in error or is this an error? Mr. BnIIRMAN. What you say there is absolutely correct but the verb "review" is important. Mr. LATTA. Let me say we will let that stand, then. We don't want to change that. Mr. BEIIRMAN. The verb "review" is important. This Board does not formulate policy. It reviews the policy and the actions below, and the policy above, and makes sure that they are consistent. Mr. LATTA. This committee has found and you have found that one of the most glaring shortcomings in the administration of the Export Control Act is in the followup procedure. Have steps been taken to correct this shortcoming? Mr. BEIIRMAN. As I have indicated in my statement we have added additional investigators but we have not been able to move as rapidly as we would like because of the lack of action on our budget and our supplemental request for this year. Mr. LATTA. I am glad to hear that you are taking these steps. You probably read the testimony that Secretary Rusk gave this committee, his testimony being given on February 5, 1962? Mr. BEIIRMAN. No, sir, I don t remember reading it. Mr. LATTA. Well, let me read you part of it because I think it is important that we discuss this matter. Do you know what action this country took after the foreign ministers meeting, or at that meeting? Mr. BEIIRMAN. Yes, sir. Mr. LATTA. l asked the Secretary this question : Mr. LATTA. Have any other countries Indicated that they intend to take the same action that we took on February 3 toward Cuba? Secretary RusEE. We do not have information from any of the other countries of the hemisphere on that point. Actually the trade, as such, is being handled on the basis of recommendations by the Council of the Organization except for arms and traffic in arms. Our action is taken under that paragraph which I read to the committee earlier, urging all governments to take individual and collective measures with respect to subversion, and so forth, because we felt that the foreign exchange which Cuba was earning from their sales to us, was the primary instrument with which they were able to support and carry on some of these subversive activities in other countries. So it was the foreign exchange aspect of it rather than the normal kind of trade problem that was uppermost in our minds. Mr. LATTA. So this was a unilateral action on our part and was not done in conjunction with any other negotiations? Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 694 EXPORT CONTROL ACT OF 1949 Secretary Rusx. The other countries did not Join with us in this particular declaration but this was taken under a paragraph of the action at Punta del Este that had the approval of :l9 States. Mr. LATrA. Isn't it a fact that most of the arms and implements of war that Mr. Castro is receiving are from the Soviet bloc? Secretary Rusx. That is Corr act, sir. Mr. LAvrA. So actually these foreign ministers who voted to immediately sus- pend all trade with Cuba in arras and implements of war didn't actually give up anything, did they? Secretary RusK. They did not give up any trade which they were sending to Cuba, but!what we are aiming it is onward shipment of these arms from Cuba anywhere; else in this hemisphere, and that is a very important aspect of it. Now, this is what I was hoping to clarify, whether any other coun- tries in this hemisphere or any friendly nations in the world have taken similar action, to this date, to that which we took February 3 of this year. Mr. BEHRMAN. In terms oaf an embargo on exports? Mr. LATrA. Yes. Mr. BEHRMAN. To my lir.owledge no, sir. Mr. LATTA. Then we diclrL't do too well, did we? The testimony shows tha, they intended to do something about this, particularly as far as the Cocom committee is concerned. Let me read you somethi r g else : I made this statement to the Secretary of State : Since there aren't any international controls of exports to Cuba through the Cocom structure, are we going, to recommend to the Cocom nations that they take similar action to that whi c 3 we have taken? Secretary Rusx. I think fot owing the Punta del Este meeting there will be discussion with a number of governments on this kind of problem. Mr. LATTA. No date has been Set for it? Secretary Rusx. No, sir ; we are Just 'back this weekend from Punta del Este. Mr. LATTA. It certainly will probably be the position of our Government that Cocom take similar action. Secretary Rusx. We believe that it would be inconsistent with the attitude of all of the inter-American States for friends of ours elsewhere to send Cuba. materials which we are trying t) interrupt. Mr. LATTA. Well, now, did we make that recommendation or are we just being kidded, that action was going to be taken? Mr. BRMAN. As to what occurred in Cocom on that, Mr. Latta, I would hope that you would direct that question to the Department of State. I was not there at that meeting. Mr. LATTA. Would nct the Commerce Department make some recommendations to the Department of State? Mr. BEHRMAN. We are f, member, we have a part, a role in the de- partmental committee stra~3ture, in determining our positions prior to the Cocom meetings, yes, sir, and we would have made our views known in that interdepart mental committee before the final papers were carried to Paris. That we have done. Mr. LATTA. But you dor.'t know whether or not anything has been done? y Mr, 7BEHRMAN. I cannot tell you the specific actions taken by the Europeans under Cocom., vis-a-vis Cuba. Mr. LATTA. We hear all this hullabaloo about Cuba and nothing is being done and nothing has been done. This was back on February 5, 1962, that this testimony was given to this committee. Approved For Release 2005/05/12 : CIA-RDP65B00383R0001.00130001-8 ApprovedJFor Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Now we are asked to call up the Reserves and to do this and to do that because of Cuba and nothing is being done. Nothing has been done since that time dealing with trade with Cuba. We pointed out at that time that a lot of our friendly nations were just rushing right in to take up the trade gap that was left since we're pulling out of Cuban trade. And nothing has been done with regard to recommend- ing through the Cocom structure that something be done about it. Mr. BEIIRMAN. I did not say nothing had been done as far as that goes. This is not my bailiwick. I did answer the chairman I believe, or Mr. Lipscomb earlier that a recommendation had been made follow- ing what the Secretary of State had said. The extent to which there was cooperation I cannot reply to. Mr. KITCHIN. If the gentleman would yield at that point. I had a letter yesterday from Mr. Dutton of the State Department concerning the Cocom meeting in which letter he said a. report was being prepared for submission and we would be furnished a copy of that report as soon as it was available. I will certainly make that a matter of record and if we don't have the answer we will. see if we can get it from the State Department. Mr. LATTA. I would hope you would do so, Mr. Chairman, as this is information which the people of this country are entitled to have, particularly in view of what is happening down in Cuba. One of the purposes of the meeting at Punta del Este was to attempt to take some kind of action against Cuba. The way it turned out- as far as we are able to ascertain right now the only action that was taken was the action we took and we didn't get any other friendly nations to go along with us. i am most disheartened by this failure. I felt certainly we had some friends who would go along with us in a time of need. Now I want to go to this Yugoslav question. Did I understand you to say earlier this morning that they are now being treated as a free country or a free nation? Mr. BEURMAN. They have been so treated ever since 1950. Mr. LAP1'A. There are items that they don't have to get licenses for at all? Mr. BEHRMAN. There are items shipped under general license to them just as to the rest of the free world; yes, sir. They are not sub- ject to the same positive list controls of the Soviet bloc. Mr. LATTA. There hasn't been any change in our position since the last time you were before the committee as far as you know? Mr. BEHRMAN. No, sir. Mr. LATr A. That astounds me because I have an article here from the Evening Star of May 17, 1962, which says : "Tito a Friend Again, Khushchev Declares." Did you happen to read the article? Mr. BEFIRMAN. No, sir. Mr. LATrA. Let me read you the article : VARNA, BULGARIA, May 17 (AP): Premier Khrushchev says the Soviet Union's long-strained relations with Communist Yugoslavia are once again good. "Our relations with Yugoslavia were rather strained previously," Mr. Khru- shchev admitted yesterday, "but now I can say with satisfaction that our rela- tions are normal, and I would even say good." Speaking before a crowd of 30,000 Bulgarians in the main square of Varna, a Black Sea resort city, Mr. Khrushchev declared that the Soviet Union and Yugo- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 696 EXPORT CONTROL ACT OF 1949 slavia are in harmony or, many questions, and commercial ties between the two countries are improving continuously. "We are also ready to develop scientific and cultural relations with Yugo- slavia in the interests of strengthening peace," he said. Marshal Tito's independent brand of communism caused the first split in Communist ranks after World War II. The United States has sought to en- courage his independent course with large-scale economic and military aid. Mr. Khrushchev sent Soviet Foreign Minister Andrei Gromyko on a fence- mending mission to Belgrr de last month, and the talks with President Tito and other Yugoslav officials apparently pleased the Soviet leader. Mr. Gromyko stood nearby as Mr. Khrushchev addressed the throng from the balcony of Varna's city hall on his goodwill tour of Bulgaria. Mr. Khrushchev also held out the olive branch to another of Bulgaria's neigh- bors, Western-allied Turkey. . Declaring the Soviet Union looks forward to the time when the Black Sea will become "a sea of peace," Mr. Khrushchev added : "Isn't it time for the ruling circles in Turkey to understand that military preparations are useless? :'.t is time to transform launching sites into peaceful corners. "The imperialists try to give alms to the Turks, but the people of Turkey are fed up with such a situatioi because the Turks are obliged to make tremendous expenditures which are impcssible to offset with alms." Talking with Western ne'vsmen, Mr. Khrushchev confirmed that the Soviet Union is preparing a new serles of nuclear tests of its own. "We are forced to renew or tests because, despite our appeals, the Americans did not refrain from renewing theirs," he said. It would seem to ine :n view of the renewed friendship between Tito and Khrushchev thtt it might be reflected in the actions of the Commerce Department in granting these licenses. I see; the gentleman to your left there shaking his head "No," that it wouldn't be reflected. Is that the position, that the relationship betweei1 Khrushchev and 'Tito means nothing, insofar as the granting of these licenses is concerned? Mr. BEHRMAN. The decision on how to treat Yugoslavia is not A decision of the Departmem; to make. Mr. LATrA. I understan I that, but let me ask you whether or not any word has come from the State Department over to you that be- cause of this renewed friendship between Tito and Khrushchev that there shouldn't be any change in our relations. Mr. BEHRMAN. To date there has been no change in our licensing policy. Mr. LATTA. That, is very astonishing as it seems to me when these situations like this come about, they should be reflected in the policies of your Department. Certainly it would seem to me that immediately following the May 17 statement-I haven't found any place where there has been a refutation,-that this would be something for the Export Control Review Board to take under consideration. I hope when we get this information on the August 18 meeting of the Export Control Review Board that they might have discussed that. Mr. BEURMAN. May I just for the record make a correction, Mr. Latta, that I did not state the: meeting was on August 18. I said it was prior to that time and we will supply you with the date, in con- fidence. Mr. LATTA. Thank you. Do you have any knowledge of how many items have come off of the Cocom list since the last time we met? Mr. BEHRMAN. We can supply that to you. I do not have it with me. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 697 Mr. LATTA. To your knowledge, have any come off of the list? Mr. BEIIRMAN. Certainly it will be in the State Department's re- port. Some did come off. A substantial number of our requests went ,on. Mr. LATTA. Could you tell us offhand what items went on? Mr. BEIIRMAN. No, sir, I cannot offhand. Mr. LATTA. About how many items? Mr. BEHRMAN. Again, sir, that would be in the State Department's report. It is not easy to say the items. Some of these are categories of items and it depends on the classification but offhand if I can guess, on the order of 15 or 20 items went on. Mr. LATTA. One further question on Yugoslavia : Under our present policy of granting these licenses to Yugoslavia, since she is in the free nations category, there wouldn't be any way we could stop Mr. Tito from reshipping articles to Russia that we now deny her directly? Mr. BEHRMAN. Yes, sir, we have ways of developing some knowl- edge of the end destination of commodities. It is not easy to do, ob- viously. We have their cooperation in validation of the end use of things specifically that we ask about. Not in every case but in many cases and obviously if we found there was a violation we would not then ship that item into Yugoslavia. Mr. LATTA. Well, in a good many of these items they only ask for one; don't they? Mr. BEHRMAN. I don't think that is the case with Yugoslavia but I would have to check the record, Mr. Latta. Mr. LATTA. So then we take Mr. Tito at his word. If he said he is not going to transship these items to Russia, we say, "OP, Mr. Tito, we will go along with you until we find out through our various and devious means that they have been transshipped"; is that correct? Mr. BEnRMAN. They are not necessarily devious, Mr. Latta. We get the cooperation of the Yugoslav Government in making certain many of these things are placed where they indicated they would place ahem. Mr. LATTA. Yes, but I can well remember testimony earlier that you don't have a sufficient staff to trace all of these items as far as their end use is concerned. Mr. BEZIRMAN. We cannot trace them all. Mr. LATTA. You have to get this information from various and sun- dry means. You take it from where you can get it. Mr. BEFFRMAN. That is correct, sir. Those we consider to be im- portant in terms of transshipment-and these would be much less than we are shipping-we have end-use checks and procedures, some of which we have established since I previously talked with you. Mr. LATTA. You have no way of knowing whether these items we ship to Yugoslavia are used in Yugoslavia to replace items that nor- mally are produced and used in Yugoslavia, in order that Yugoslavian goods might be sent to Russia. Do we have any way of knowing this? Mr. BEFHRMAN. In some instances we know this is the case, that the end product of equipment might itself be going into Soviet Russia. Mr. LATTA. In conclusion one question: Do you know of any grain (shipments that are contemplated for Communist countries? Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 698 EXPORT CONTROL ACT OF 1949 Mr. BEHRMAN. No, sir; not that I know of other than Polish. The Public Law 480. There may be some to the total Communist countries, Mr. Latta. I woul I have to check into that. Mr. LArrA. Woild you do that? I am very much interested in your checking intc it and reporting to the committee. Mr. BEiiRMAN. On the grain shipments? Mr. LATPA. Yes, sir. Mr. BEIIRMAN. I will be glad to do so. (The information follows:) Irioenses approved' fo^ grain for shipment to Eastern Europe (except Poland) and Cuba, Jan.1 through Sept. 19, 1962 Bulgaria, sorghum see,d---------------------------------------- -- $257 East Germany, sorghum seed--------------------------------------- 1 Hungary, sorghum sevd=------------------------------------------- 211 Rumania, sorghum seid____________________________________________ 217,252 Total-------------------------------------------------------- 217,721 No license applicatiom for grain for these destinations were pending in OECI on Sept. 19, 1962. Mr. KITCHIN. Mr. Sisk. Mr. Sisg. To your knowledge, Mr. Behrman, has there, since the policy was originally established that Yugoslavia was independent of the Soviet bloc and independent of Russia and Russian domination which occurred in 1P48, which has been 15 years, has there been any change in our policy with reference to treatment of Yugoslavia ? Mr. BEHRMAN. As Far as I know, no. Mr. SISK. That has occurred over a period of three administrations. It has been 7 years in which Democrats have been in power and 8 years in which the Republ scans were in power and yet there has been no change regardless of the fact that from time to time there have, been attempts at rapprochement, and there have been, of course, visits' back and forth and so on. But to your knowledge there has been no change in our policy, and this is a policy, of course, set in the final analysis by the President and the administration, in our treatment of Yugoslavia as an independent country? Mr. BnliRMAN. Tha As correct, sir. Mr. Sisic. Thank yo i, Mr. Chairman. Mr. KITCtiiN. Are there any other questions? If not, thank you very much, Mr. Behrman for coming over.. Mr. BEURMAN. Thank you, sir. We appreciate appearing again, (Whereupon the committee recessed at 11:58 a.m.) Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 INVESTIGATION AND STUDY OF THE ADMINISTRATION, OPERATION, AND ENFORCEMENT OF THE EXPORT CONTROL ACT OF 1949 AND RELATED ACTS TUESDAY, OCTOBER 2, 1962 HOUSE OF REPRESENTATIVES, SELECT COMMITTEE ON EXPORT CONTROL, Washington, D.C. The select committee met, pursuant to notice, at 10 a.m., room 313-A, Cannon Building, Hon. A. Paul Kitchin (chairman) presiding. Mr. KITCxnN. The committee will come to order. The Select Committee on Export Control, established pursuant to House Resolution 403, adopted September 7, 1961, has held extensive hearings since October of last year relative to the administration, operation; and enforcement of the Export Control Act of 1949 and related acts including Trading With the Enemy Act, Atomic Energy Act, the Battle Act, and other pertinent statutes dealing with control of trade with Communist countries. The committee submitted a report in May 1962, containing an analysis of its study and investigation. It submitted a number of pertinent recommendations which if adopted, would serve to further tighten control over exports to Communist countries. As a followup, this committee heard detailed testimony on September 13 and 14, 1962, from Mr. Jack N. Behrman, Assistant Secretary of Commerce, as to the action taken by that Department on the recommendations germane to the jurisdiction Commerce has over export controls. I might add that I am pleased with the action taken by Commerce to improve and implement its investigative and enforcement procedures which should serve to tighten control over exports of strategic com- modities to Communist countries. For the past several weeks there has been an ever-increasing con- cern in the Congress and indeed throughout the country over the continuing Castro-Soviet economic and military buildup in Cuba. Of particular interest to this committee is the assistance that has been rendered in this buildup by ships flying flags of free world countries. There have been reports indicating that possibly American-owned ships of foreign registry have been engaged in the transport of com- modities to Cuba. During the course of the hearings today and tomorrow, this com- mittee will seek to develop- 1) The extent of free world shipping in Cuban trade. (2) How such shipping adversely affects our national security and welfare and assists the spread of the Communist inter- national conspiracy. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 !OU EXPORT CONTROL ACT OF 1949 (3) What is being done about it. (4) What has been accomplished in these efforts? We have a number of prominent witnesses conversant with the many facets of worldwide shipping to Cuba who will be heard today including my distinguished colleagues in the Rouse of Representatives. Tomorrow we will hear testimony from the Honorable George W. Ball' . the Under Secret:nry of State, pertaining to our Government's policies in dealing with he Cuban problem and the steps that are being taken to implement such policies. This morning we .are going to have to proceed as rapidly as we pos- sibly can because we have a number of witnesses, several of whom .are from out of town. I would like to hear f.rst from my very distinguished colleague and chairman of the Merchant Marine and Fisheries Committee, the Hon- orable Herbert C. Bonner. Mr. Bonner, we will be glad to hear from you at this time. STATEMENT OF HON. HERBERT C. BONNER, A. REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA Mr. BONNE R. Mr. Chairman and gentlemen of the committee, I first want to congratulate you on the effort you are making in this field. Since the end of Word j War IT the United States has given untold billions of its substance in aid of its allies. While to a large extent this was motivated by charitable impulses, there was always the con- sciousness of the menace of communism and the necessity of securing strong allies to contain it, Our country always felt that this is the major menace confronting the world, and unfortunately our allies have taken a somewhat softer attitude toward it. This, they have no compunction whatsoever' in trading with Communist countries and utilizing their vessels to carry Communist cargoes, while we have forbidden our ships to enter that trade.', In the recent past, with the rise of the Castro government and the increased support given by Russia to that dictatorship there has been a very substantial increase in the number of cargoes carried by our p1- lies' vessels in the cause cf communism. During the period from June to August, 1962, at total of 169 merchant ships flying the flags of 20 free countries made a to ;al of 185 trips to Cuba. Of this number 29 percent of the owners ware from the United Kingdom, with 34 ~>er- cent of the vessels involved: Thirteen percent of the owners were from Germany, with 12 percent of the vessels; and 13 percent from Norway with 9 percent of the vessels. In addition, flags of 17 other recipient countries of American generosity were represented in the trade in smaller measure. To add insult to injury, a number of the vessels engaged in that trade, after discharging their "made in Russia" cargoes in Cubo, proceeded to ports in the United States to pick up Government-aided cargoes for the return voy age. Significant as the buildup of Communist forces within 90 miles of our shores is, the potential of its spread to the various countries in political difficulties in Central and South America is a greater danger. It is regrettable indeed that our allies who are perfectly happy to Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Releas g / o~IAREg6JgPg383R0001001 001-8 accept our assistance in varying degrees to combat the menace of coin- munism when it appears near their boundaries are blind to the dangers of an outbreak in our hemisphere. One can only come to the con- clusion that their greed for dollars from employment of their vessels outweighs their fear of another world struggle. Unhappily it is within our memory that we had to spend billions of dollars and the lives of hundreds of thousands of our youth to rescue Britain from its folly. It may well be. that another period of blindness has set in, and it may be that we must see to it alone that the horrors of 20 years ago do not recur. Efforts have been made to secure the voluntary cooperation of our allies by pointing out to them the dangers of a Russian buildup in Cuba, and I am happy to say that some of the larger shipowners abroad have recognized their obligations to the free world by pledging the withdrawal of their vessels from the trade. Unfortunately, however, our plea has fallen on many deaf ears, including those of Great Britain where the curious position is taken that any attempt to restrict trade by British ships with Cuba would infringe upon their right to freedom of the seas. By this time the danger of the spread of communism in the Western Hemisphere should be painfully apparent, even to the most obtuse, and the consequences of its spread are too horrible to contemplate. Under the circumstances it is essential that we adopt drastic meas- ures to protect not only ourselves but the rest of the free world. Since our allies have refused to meet the danger by voluntary action we are forced to take such steps as lie in our power to minimize the danger to the free world. We can do this by withholding economic aid from those countries that refuse to cooperate in the common effort to restrict the scope of communistic aggression. When the foreign aid appropriations bill was under consideration in the House on September 20, I spoke of the danger inherent in the continued trading by free world ships to Cuba, and I offered an amendment which was adopted by the House, intended to help put a stop to the practice by denying the payment of "any expenses of transportation, directly or indirectly, to merchant ships of any nation whose ships are used to transport any military or economic supplies to that [Cuban] regime." By this amendment I intended that irrespective of whether trans- portation expenses were paid directly in dollars, or whether they were covered indirectly by foreign currencies in the hands of foreign countries receiving military or economic aid through military assist- ance or Public Law 480, or other means, the ships of those nations would be ineligible to receive payment for transportation of aid cargoes if they had been trading with Cuba. If cooperation will not work perhaps economic restraints will. Mr. Chairman, I do believe-and it is difficult to find out just how the moneys in the foreign aid program are shifted from here to there, and how they are used-the inclusion indirectly and directly should be looked into very carefully by your committee, those who have the responsibility, and it is a responsibility to the citizens and to the people of America directly and indirectly, economically, and otherwise, to see that every effort is made. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 X702 EXPORT CONTROL ACT OF 1949 Through this effort, we can drive home what we mean and not cite nations directly with. respect to their sovereign rights on the; high seas under section 10:: for the purpose of carrying this out. Section 402 (a) of Public Law 480 and I read : *! * * For the purpose of carrying out agreements concluded by the President hereunder, the Commodity Credit Corporation, in accordance with the regula- tio4s issued by the President, pursuant to subsection (b) of this section : (1) Shall make available for sale hereunder at such points in the United ;States as the President may direct surplus agricultural commodities heretofore or hereafter acquired by tho Corporation in the administration of its price support operations; (2) shall funds available to finance the sale and exportation of surplus agricultural commodities from the stocks owned by the Corporation or pledged or mortgaged as security for price support loans, or from stocks pri- vately owned if the Corpc ration is not in a position to supply the commodity from its own stocks. I would say, Mr. C aairman, it is pretty broad language as to what can be done. Mr. Cl airman, I do not come here with any desire to interfere with the executive administration of the foreign aid program. I realize the seriousness of the times. I realize what has peen accomplished in the foreign aid operation and yet I must say I have seen personally, and I have heard personally, of many situations in the administration of the program that have been most unsatisfactory. It is something that has grown into the economy of our country itself and it is looked upon by the world as the give- away program. Yet, I admit in many instances it has been meritorious and worthwhile. I have differed with it personally myself and my record in the House o' Representatives shows this, and I have tried to be charitable toward it. However, in this instance, I firmly believe that the nations we lave been most generous with should cooperate with us in this case. I hope that when the foreign aid program comes back to the House, this amendment which was thought out with care and with no malice toward anyone will be retained in the conference report. Mr. KITCHIN. Thank you. I thank the gentlerr an and want to say I am most appreciative for a very enlightening statement. I' want to take this opportunity publicly to congratulate him for his amendment adoptod overwhelmingly in the House of Representa- tives. I feel that that amendment, if kept in the act and implemented, will certainly be a step forward and something that can be done; with reference to the Cuban shipments, particularly as they pertain to this situation. Mr. BoNNER. If you permit me to say, this is not aimed at injuring the :foreign aid program whatsoever. Mr. KITCHIN. I can appreciate that and I am in thorough agreement with the gentleman's amendment and the thought that prompted. the amendment. We thank you very lnuch for coming to be with us. The next witness is our very distinguished colleague from Florida, theHonorable Paul Rogers. ? Mr. Rogers, come around and we will be glad to hear from you. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R00010%J0001-8 EXPORT CONTROL ACT OF 1949 STATEMENT OF HON. PAUL G. ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE ,OF FLORIDA Mr. ROGERS. Thank you very much, Mr. Chairman and members of the committee. I appreciate this opportunity to present testimony on the subject of the Cuban buildup by water-borne commerce. This traffic in goods has received much attention in the past few weeks. The matter is timely, and I know the American people are grateful to you, Mr. Chairman, and your committee in taking time during these busy closing days of the Congress to hold these hearings because the national interest demands them. As a Member of Con- gress from Florida, I am particularly interested in this problem. As I stated before the House on September 20, this select committee is the appropriate arm of the Congress for such an investigation. The entire matter of intensified Soviet shipments to Cuba has aroused the American public in recent weeks, and public outcry for action includes an expose of the details surrounding water haulage of the goods needed for this buildup. The first Soviet moves to Cuba came as probes, then once the decision to move was made, ship traffic to Cuba came quick and concentrated. The Soviets had to move fast in getting goods to Cuba. Their merchant fleet was strained in transport military cargo and person- nel, and it was impossible to move as quickly as they did without the help of other nations. As we all know, help was obtained readily from many nations purportedly friends and. allies of the United States. It must be added at this point that the Governments of West Ger- many, Turkey., and Norway have expressed willingness to cooperate with the United States now by discouraging further shipments to Cuba. The decisive actions taken by these flags did much to shore up the confidence of the American people in their allies. Although the Soviet Union began shipping military and industrial cargoes into Cuba as early as last year, the critical period in Soviet- Cuban traffic occurred in the past few months. For example, cover- ing the period June-August, 1962, a total of 169 merchant ships flying the flags of 20 free world nations made 185 trips to Cuba. Ships flying the flags of Great Britain, Greece, Norway, and West Ger- many accounted for more than 61 percent of the ships involved, and 61 percent of the total, trips made to Cuba. The number of free world vessels participating in trade with Cuba is approximately double com- parable figures for Soviet shipping. Clearly, the Moscow-to-Havana pipeline would have been severely crimped had it not been for the cooperation and assistance given to the Soviet Union by the 111 companies of 20 free world nations. I would like to add at this point that commendations are due the Department of Commerce and the Maritime Administration for their surveillance and study of this matter. Many of the figures I use are substantiated by their thorough study. Within the period June-August 1962, of the 169 ships flying the flags of 20 free world nations into Cuba, 25 percent were Greek, 15 per- cent were British, 12 percent were from West Germany, and 9 percent Norwegian. These were the major offenders. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Apprpyd For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 Many of these ships are owned by interests located in other countries; and fly the above flags or vice versa. Additional free world vessels were- Spain-------- ---------------- Denmark --------------------- Sweden ----------------------- Japan------------------------ Yirgoslavia___________________ L4banon--------------------- Itidy Liberia--------------------- Number of ships Netherlands ------------------- France ------------------------ Panama ------------------- ? -- Chile----------------------?-- Belgium Finland---___________________ Morocco.--------------------- Turkey---------------------- Number of trips Number of trips The problem has been compounded in several instances. Not only do U.S. allies transport goods to Cuba for the Soviets, but after unloading in Cuba, put into U.S. ports for profitable cargo runs to be delivered elsewhe:'e in the world. Many shipowner;, justify their commerce with the Soviets on. grounds that the world's shipping industry is undergoing a reces- sion. They say tha such trade is needed to help keep their govern- ments economically stable. However, the world's merchant fleet numbered 17,426 vessels as of January 1, 1962. Free world ships. trading with the Cuban Communists are small percentages of they merchant fleet, and therefore it is doubtful that the Cuban trade is, significant in solving any of the world's shipping problems. The, figure is about 1 percent. The use of U.S. ports to further the profit in Cuban commerce makes action more necessary and imperative. Our ports show some figures which are astounding. The following allied ships sailed to Cuba after having put into U.S. ports : Ship Flag Arrival in Cuba Owner Aloios__________________ At]}elknight Liber:an________ June 6, 1962, from Mobile, Ala------------------ J l Greek. ____________ Captain Yiannis-------- __________________ Ltber an -------- u y 21, 1962, from Albany, N.Y----------------- July 3,1962, from Jacksonville Fla -- British, Panama Pedro Campbell -------- Panainanian.... , ------------- July 24, 1962, from Port Arthur, Tex ------------- . Uruguay Roberto Parodi--------- Sugar Transporter-----. Italia a---------- British ------- July 18, 1962, from Tampa, Fla________.._________ July from Savannah (3a . Italian. --- , , _______... Italian. As this committee recalls, the House unanimously passed a .bill I introduced to ban trade with Cuba. This was followed on February 7, 1962, by the President's Proclamation No. 3447, prohibiting such trade. However, since that order became effective, the following vessels sailed from Corpus Christi, Tex., to Havana, Cuba. The cargo, ][ am informed, in each case included cotton linters, a material used in the manufacture of explosives. Tannstein---------------------- Nabstein------------------------------ Meishoin Maru---------- _______?__-_-- West German_______________________ ---do------------------------------- Japanese---------------------------- Date of de- parture from United States Mar. 12, 1962 May 4, 1962 July 22, 1962 Number of ships Destina- tion Cu ba. Cuba. Cuba. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 705 These movements would be a violation of the embargo on Cuban trade, and if sufficient evidence is forthcoming they should be prose- cuted under the law. Furthermore, the machinery set up to enforce the law should be investigated to determine where this breakdown in enforcement occurred. Records of other U.S. ports would un- doubtedly yield even more, if thorough research were done. Our own U.S. Government-generated food surplus programs exe- cuted under Public Law 480 are even being transported in bottoms still fresh from Communist cargoes. Nine ships approved by the U.S. Department of Agriculture for carriage of Public Law 480 cargoes during the last half of 1961 are among the ships participating in Cuban commerce during the June-August 1962 period. These ships should not be approved in the future unless they suspend their Cuban activities. Three more recent vessels are the West German Catharina Oldendorff, and the Yugoslav freighters MV Drzic and SS Mijet. Here is an area where direct U.S. Government action is imperative. These ships should be blacklisted from transporting American food cargoes at the earliest possible moment. This blacklist, I think, should also include a prohibition of shipments of American goods on ships of any nation whose flags fly in Cuban traffic. Adequate legislative au- thority exists already for this Government to act. As this committee knows, that authority exists in sections 2022 and 2023, Export Control Act of 1949. I strongly urge that the provisions of this law be fully implemented, and that further use of these ships be halted. Mr. Chairman, the United States is presented with a. clear and pres- ent threat from the Soviet buildup in Cuba. The weapons, arma- ments, and personnel now in Cuba add up to a new Soviet offensive in the Western Hemisphere. This offensive is being aided by the 28 free world tankers which ran petroleum products to Cuba in the June- August period. The State Department has admitted that many Soviet-flag ships used in the Cuban buildup actually belong to the United States. Such ships were loaned to the Soviets during World War II and have not yet been paid for nor have they ever been returned. As you can see, there are many questions in this matter which need answering. I would urge the committee as follows : (1) Full implementation of the Export Control Act, sections 2022 and 2023. Such action would ban shipment of Public Law 480 com- modities aboard vessels engaged in Cuban commerce. (2) Recommend denial of U.S. ports to any flag engaged in Cuban trade. (3) Strict enforcement of Presidential Proclamation 3447 to guarantee an airtight embargo on U.S. trade with Cuba. (4) Determine why and where America's strong feeling against allied shipping to Cuba was misinterpreted. (5) Condemn continued Cuban commerce by flagships of Britain, Greece, and Italy. Mr. Chairman, pressures from the Congress have already brought results. West Germany, Turkey, and Norway have now announced their willingness to cooperate with the United States. With con- tinued insistence by the Congress and its committees, the policies and actions of this Government will be consistent with the aims of this Nation. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 706 EXPORT- CONTROL ACT OF 1949 I thank you. Mr. KITC]UN. Tha:ak you very much. I certainly appreciate this very informative and enlightening state- ment. You are to be congratulated for exhibiting a keen interest in this Cuban situation and you have certainly made yourself vocal and have been heard and have been agreed with by a large majority, if not all, of the Members of the Congress. I congratulate you for, .it. By way of passing, I would like to say the information embraced in one part of your statement is evidently contained in the Maritime Administration report on. Cuban trade dated September 24, 1962. Later in the proceedings 1. will put this into the record, without objection I hope, the report from the Maritime Administration. Mr. ROOERS. That is correct, Mr. Chairman. Mr. KITOrnN. Thank you so much. Mr. RoGERs. Thank you. Mr. KITCHIN. We now have our colleague from New York, Mr. Frank Becker. We will be delighted to hear :from you, Mr. Becker. STATEMENT OF HON. FRANK J. BECKER, A REPRESENT'ATIV'E, IN CONGRESS FROM THE STATE OF NEW YORK Mr. BEcKER. Mr. Chairman and members of the committee, I am not going to put in the record much of the detailed information that. has already been put in by our colleagues, Mr. Bonner and Mr. Rogers. I Would like to say that I concur in the information they have placed before the committee, as well as their position. However, I have a further point I would like to make that may not be within the province of this committee, but ,ertainly I want to make my position cleat. While all this information is fine, while these negotiations must be carried on with our allies .and countries in which we have spent nearly $100-billion to rehabilii;ate in past years, we must also recognize :the fact that both Khrushchev and Castro are going to find ways of sh:ip- ping to provide material of war as well as economic shipments into Cuba. I think we must recognize this and we are not going to stop it by getting our allies to stop usinm their ships to send commodities into Cuba: At least, that is my humMle opinion; Ifeel that is the case. I took the position a ago that the only way we can stop this and protect the Western Hemisphere-and I stated this on the floor . of the House-is by a blockade of Cuba. Again, only yesterday I sent a telegram to the President to thin very same effect. In continuing negotiations with our allies to prevent this kind of shipping and carrying on trade with Communist countries and to invoke the Monroe Doctrine as well as to provide a sea blockade of Cuba,I believe this is the only way we are going to prevent a further buildup of offensive, as well as defensive, weapons in Cuba. There is no differencE between the two kinds of weapons in M. humble opinion. I know that someone will say this is a risk and yet I also recognize, as do many Members of Congress, that the world all around us has been looking to the United States for leadership. If they find this leadership soft, if they find we are going to sit idly by while we are Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 3 W/& TC%-l PG B@0303R000100134tfl 1-8 permitting a great menace to be constructed 90 miles from our shoreline, then, of course, we cannot look for allies to be strong and carry out our wishes and respect us in assisting in this particular program. Mr. Chairman, I just want to read into the record one of the most significant statements made by any man and one who has been well re- spected in the world, and a man who has a great background. I took considerable time and trouble to read Winston Churchill's book, "The Gathering Storm." To back up my opinion of a year ago, as well as more recently, I would just like to read this into the record, if you have not already heard it. Sir Winston Churchill, in his book, "The Gathering Storm" speaks of the "milestones of disaster" in the 1930's and of the series of acquies- cences in Hitler's aggressions in the Rhineland, in Austria, and in Czechoslovakia, until finally the climax came in Poland. He then wrote, "Here is a catalog of surrenders, at first when all was easy and later when things were harder, to the ever-growing German pow- er. * * * Still, if you will not fight for the right when you can easily win without bloodshed; if you will not fight when your victory will be sure and not too costly ; you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may even be a worse case. You may have to fight when there is no hope of victory, because it is better to perish than live as slaves." Mr. Chairman, I say that is one of the most significant statements of our times and of this decade. I believe we must profit by this state- ment. Either we do something now or constantly, more and more, we are eroding away our opportunity, not only to defend ourselves in the future, but the free world, because the free world is dependent upon our strength and upon our position as leader. I say that being soft in this position-and I am not talking about any administration and I will back this administration or any admin- istration--,but I believe that we have got to take a solid, a firm position and action. Through our foreign aid, we have helped countries all over the world and we know these countries, as stated before by Con- gressman Bonner and Congressman Rogers, are our allies and while receiving our aid, have conducted trade with Communist China and with Soviet Russia and with other countries to put dollars in their pockets. This has not been for the best interests of the free world but it has assisted the growth and power of communism and Communist domi- nation. Mr. Chairman, that is all I want to get in the record now, my posi- tion. I think we should do this now if we are to accomplish our mission in the world as leaders of the free world. I thank you. Mr. KITCHIN. Thank you, Mr. Becker, for a very informative state ment. We certainly are very appreciative of your coming down and testifying. Mr. BECKER. Thank you. Mr. KITcHIN. Are there any other Members of the House or the other body present? Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 #pproved For Rem. q9,?Rb12A(q,%-f2Wf~1300383R000100130001-8 (No response.) If not, we will be very pleased to hear from Mr. Joseph Curran now president of the Ma ritime Union. Vr. KITCIIIN. Mr. Cu -ran, come around. I believe you have a formal statement? Mr. CURRAN. Yes. Mr KITCIIIN. You may proceed. STATEMENT,OF J013EPH CURRAN, PRESIDENT, NATIONAL MALITIME UNION, AFL-CIO Mr. CURRAN. The National Maritime Union, whose members bore a heavy share of the sacrifices required for victory in World War II, and whose skills, dedication, and sacrifices will be essential in any future conflict, regards the Soviet military buildup in Cuba as a challenge that the free world must meet. It is for our Government to determine what military, diplomatic, and economic measures it will take, on its own and with its allies, to meet this challenge. For ourselves, as free trade unionists we consider it our right and a duty, regardless of Go,=ernmen.t policy, to protest by every possible means any movement of cargoes and ships which can help create a Soviet bastion on the is and. The Soviet military buildup in Cuba has raised many serious ques- tions concerning our Government's relations with nations supposedly allied with us in defense )f the free world against Communist aggres- sion. As a spokesman fcr a maritime union, I would like to address myself to question which it has raised concerning our merchant marine policy. Since World War II, our national policy has been one of down- grading the American-flag merchant marine. We have a law on the books,.the Merchant Marie Act of 1936, which makes it the responsi.- bility of the Government to protect and promote a merchant fleet adequate to our peacetime; and wartime needs. We have enacted some legislation which was designed to implement this mandate. But in practice Government agencies have sacrificed our merchant marina as a sop to foreign governments, anxious to promote their own fleets, and to American shipowners, who put profits ahead of patriotism. As a result of Government policies and lack of policies with regaid to our own merchant marine, American-flag ships have been carrying barely 10 percent of American waterborne foreign commerce. Fur- thermore, the U.S. Government, as a matter of policy, has actually been fostering the development of a mammoth fleet of American- owned ships under the flags of Liberia, Panama, and Honduras. The dangers inherent in both these developments have been force- fully demonstrated in the current Cuban situation. As an example of how U.S. Government agencies have been indif- ferent to the needs of our own merchant marine, consider the abuse of our cargo preference laws. by agencies as the Department of Agricul- ture, the State Department, the Agency for International Develop- ment, and others. Our cargo preference law is supposed to assure that American-flag ships will carry 50 percent; of Government aid cargoes-not all Amer- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 709 can cargoes, just of cargoes which are generated under some Federal program. This is certainly only minimum protection. Yet, even this has been constantly nibbled at. Time and again, when a foreign government has asked for special dispensation in favor of its own ships at the expense of our own, the U.S. department involved has gone to work to give the foreign gov- ernment what it wants. Our State Department offers a sympathetic ear and a helping hand to foreign diplomats who come here for the purpose of attacking our` cargo preference and subsidy laws as "unfair" to their ships. Even the Defense Department has skirted the rules on use of American- flag ships for its oversea shipments by arranging to take title to some, important purchases in the country of destination, thus permitting' the seller to use ships of any nationality to get the cargoes to the over- sea ports where our Defense Department wants them. We of the maritime unions, with the vigorous help of some Members of Congress, have done what we could to prevent these abuses. Some- times we have succeeded, often we have not, but always we have had to battle our way uphill to maintain even the most elementary safe- guards for the American merchant marine. If there is any explanation for the indifference in Government agen- cies to our own needs, it must be that they consider the building up of the merchant fleets of other nations as essential to free world defense and this must be done even if it means sinking our own merchant marine. And, unfortunately, the one agency responsible for pro! ect- ing our own merchant marine, the Maritime Administration, has been weak and ineffective. Now in the Cuban situation, most of these friendly nations whose fleets have been fattening on American foreign commerce refuse to consider the pleas of our Government to keep their ships from aiding the Soviet military buildup in Cuba. We have the absurd spectacle of ships of supposedly friendly na- tions running cargo into Cuba-assisting in strengthening the island as a Soviet base-and coming directly from the island to a U.S. port to pick up a U.S. foreign-aid shipment to be delivered elsewhere. As to the second of these developments, the encouragement given to the creation of a vast "runaway" fleet under the Liberian, Panama- nian, and Honduran flags, this is an even more striking example of how our national interests have been sacrificed, in this case to satisfy the greed of American shipowners. The flags of these nations cover it fleet of some 1,500 vessels, total- ing more than 20 million tons. About half of it is American owned. American interests are involved in a far greater share of it. A phenomenal rise in this runaway fleet began shortly after the Korean war and the nucleus on which it began this rise was made up of American ships transferred foreign with Government permis- sion. In 1955, shortly after the bars against foreign transfer of American war-built shipping were relaxed, the Government adopted what is known as the "effective control" policy. Under it a large pro- portion of the American-owned Liberian, Panamanian, and Honduran flag ships are officially recognized as "under effective control for de- fense purposes." In other words, the Defense Department regards these ships-under foreign flags, manned by foreign crews, outside Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 710 EXPORT CONTROL ACT OF 1949 the control even of the U.S. Coast Guard as far as loyalty of the crew and safety of the ship are concerned-as part of our merchant marine:. When it comes to considering whether our merchant marine is ade- quate for defense purpose;, these ships are counted in. The folly of this polic;y,. and of the whole buildup of the runaway flag fleet has been made clear in the Cuban situation. Ships flying these "runaway flags" have been part of the Soviet shuttle to Cuba. Some of the ships in that traffic were built in the United States and were transferred out of U.S. jurisdiction to one of the "runaway" flags, although now by subsequent transfers they may be under some other registry. American money is involved in many of these runaway flag ships. Since the financial makeup of a ship is generally a tangled and slip- pery web, it would requi ?e the resources and powers of ft 'congressional committee to determine the identity and extent of these interests. Many of the ships running into Cuba have only recently been trans- ferred from Liberian to Greek, Lebanese, and other flags. The Liberian, Panair anian and Honduran flags have been of as- sistar ce to the Soviets n the cold war before this. When I was in Odessa, U.S.S.R., 2 years ago with an NMU delegation, we saw some of these ships in the harbor there. We were told that 46 of these ships had sailed into Black Sea ports within a 6-month period. The Cuban situation has made clear the dangerous folly of our maritime policies since World War II. It has made clear that 'the United States cannot rely on the fleets of friendly nations for the maritime strength the U.S. needs. In the same way that we cannot count on these nations to restrict their ships from assisting a military buildup 90 miles from our shores, we cannot count on these nations to make their ships available to us for what we may regard as an operation essential to cur security and that of the free world. Even clearer should be the folly of our support of the Panl ibHan fleet and our recognition of a part of that feet as under "effective control." If any of these countries goes the way of Cuba under Castro, what control can we exert over these ships? What control do we exert if the master or crew of one of these ships decides to make it available to the enemy'? Far from being under anything like "ofl'ec- tive control," the PanbibHon fleet for the most part comprises a vast "available" force, avai .able to the highest bidder, regardless of politics or purpose. As an immediate rleasure, where governments refuse to restrict the; participation of their ships in Cuban traffic, our Government should completely exclude ships of those countries from carrying any of our Government-ge:aerated cargoes. The Government should also abandon the dangerous "effective con- trol" hoax and eliminate the tax benefits, Government protection and the' other inducements which great American corporations now; have for operating ships under Panamanian, Liberian, and Honduranfiags. We should immediately and completely halt the transfer of Amer- ican-built ships to fo:.-eign registries. Regardless of any, paper:"con- trols" put an them, hese ships are available for hostile use, either directly or by relievi ag other tonnage for use against us. Our cargo prefereice laws should be strengthened, expanded, and effectively administe:?ed in order to assure American ships of 06 fair Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 -8 Approved For Release 2005/05/12 : CIA-RDP65B00383R00010013TV EXPORT CONTROL ACT OF 1949 share of American cargoes. We must stop the sacrifice of our own national interests in order to please countries which are out to take everything they can from us in this field. The time is long past due for the United States to build a merchant marine which befits its position of world leadership and its worldwide responsibilities. It is unfortunate that it took something like the building of a Soviet arsenal in Cuba to make the. Nation see the need. We have brought with us some lists of ships that have been trans- ferred from American to Liberian and from Liberian to other flags and some ships that are lately operating whose history is one of transfer and sale. These ships are the latest information we have, and it must be remembered that we do not have the facilities that the CIA and other cloak-and-dagger organizations of the Government have and we have to do the best we can through our maritime grape- vines, some of which are very good and some of which sometimes are not so good, but most of the information we have has been verified and is actually effective information. This one, for example SS San Spyridon: Lebanese flag; Liberty; tonnage, 7262. Built July 1943, Baltimore, Md. For W.S.A. under name of William H. Jackson. Last under American flag 1945. Operated by T. J. Stevenson. Since then laid up until 1947. In 1947 renamed Aristocrates by Aristomeis Co., Panama. Port of Cortez, Honduran flag, at that time. In 1960 changed over to the name of San Roque under Pana- manian flag. Owner in 1960, Phoenix Compania De Navigation, Panama Republic, Panama flag. In 1961 changed name to San Spyridon. New owner, Olistim Navigation Co. Ltd. Monrovia, Liberia, Lebanese, Bierut, Lebanon. These people still have the ship. 1962 Lebanese flag. Havana June 1, 1962, for Odessa LL September 10, 1962. There is Honduras effective control of that ship. Mr. KITcIIIN. If I might interrupt right now, of course this is a very informative statement and the general character of your infor- mation is extremely interesting to me, I can assure you that. Do you have a list of any of these flag ships that are now being plied in trade with Cuba? Mr. CURRAN. That one there, Havana, sixth month, first day, 1962, for Odessa, ninth month, tenth day, 1962. Mr. KITCIIIN. Two trips into Cuba? Mr. CURRAN. No, leaving Havana for Odessa on the one date and in Havana on the other date. That constitutes one round voyage. She is under the Lebanese flag, a former American ship but under effective control. She is an effective control ship, which is the im- portant point. We have more : SS Antonia: Liberty, in Havana March 16, 1962. Ex John Constantine to Whampoa. Built 1943, permanent shipyard, Richmond, Calif. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 roved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPOET CONTROL ACT OF 1949 W.S.A. to Isthmian Steamship Co. Frisco. Sold 1947 to Spyros A. Lemos, London; Chios, Greece. Changed name to Antonio, active, till 1960. Sold to present owner in 1960. Viasegura Compaaia, Naviera., Panama, Republic of Panama. Liberian, Monrovia; Liberia. Also : SSAtlantic Air, exElizabeth Blackwell. Liberty; built, 1943; tonnage, 7,255. Richmond Shipyard, Richmond, Calif. Owners Atlantic Freighters, Monrovia, Lib., 1962. Panamanian registration. W.S.A., Washington, D.C., 1944. Name changed to Atlantic Air, 1946. Taken over by Atl intic Maritime Co. London Panamanian registration, Panama. Now registered as Atlantic Freighters, Monrovia, 1954. Registered Panama. Same owners 1962. Flying flag of Panama. From Prince Ray:nont, Canada to Havana-arrived April 21, 1962. S. Livanos-Ship Brokers Ltd., London. Liverpool December 16, 1961, for Havana arrived January 22, 1962-LL January 16, 1962. Then : SS White Sea: Liberty, in Havana, Cuba, June 15, 1962. LL March 22, 1960. Ex Amy Lowell, built 1943, California Shipyard Corp. Ex Nevada 1948-E0. W.S.A. owned, operated by Seas Ship Co. (S.I.U.). Laid up James River June 8, 1946. ;Sold, 1948Danish flag to 1960. White Sea Lib. United Shipping Co., 1960. Monrovia. Havana June 15,1962, sailed Yokohoma August 8,1962. 'LL August 10, 1962. These vessels are all under effective control.- They were all former American vessels and hati e made the changes. I will not go into detail on those changes. They can be made a part of the record if you see fit. Then we have a grout of ships that were formerly under effective control, changed from Liberian to Greek flag running into Cuba. They are listed, Penelope, Delphi, and the Aldebaran. The Ald(!- baran sailed from Novor)ssisk May 11 to Havana; the Delphia, Ja i- uary 18 for Genoa from Cuba and the Penelope from Neuevitas, Cuba, for Novorossisk and passed Istanbul February 9 through the Golden Horn.. We have the ex Harmony, a tanker; she was formerly the 1 By letter dated Oct. 16, 1062, William P. Bundy, Deputy Assistant Secretary of Defense advised Chairman Kitch? n as follows : "In response to your request of Oct. 12, 1962, for information on four vessels, the following can be made available, The San Spyridon, Antonia Liberty, Atlantic Air, and White Sea have all engaged in trade with Cuba within the current year; none of these is in the United States Effective Control Fleet. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 713 Attica; Boole Panama, a Greek ship. This ship went from Rangoon to Havana, Cuba, 4th month, 28th day 1961. The World Cavalier, a tanker, built Sun Shipyard, Monrovia, Libe- ria, sailed 9th month, 7th day, 1962. That is September; Gdynia, for Philadelphia, the 4th, and trades consistently behind the Iron Curtain. Mr. KITciiiN. These that you are naming now were formerly under Effective Control? Mr. CURRAN. The last one was formerly under Effective Control. No. The group that I read, the Penelope, Delphi, and the Aldebaran, were formerly under Effective Control and changed from Liberian to Greek flag and are running steady into Cuba. All of these vessels were former American-owned and transferred and sold through various stages down through Panama, Liberia, and thence to Greek flag and other flags. Mr. KITCHIN. What I was trying to straighten out for the record, when they are submitted for the record, as to which are now presently under control and those that are not? Mr. CURRAN. All of them except the three; all except the last three I read, Penelope, Delphi, and the Aldebaran. They were formerly under "effective control." Mr. KITCHIN. All the rest will presently be under "effective con- trol." Mr. CURRAN. I might say in connection with some of these ships, the International Transport Federation, of which we are a part, car- ried off a long-term campaign to force these vessels from what we sidered the runaway flag vessels to flags of genuine merchant shipping, where the shipping had a connection with the national interest and somewhere near I would say 800 of those vessels have left the Liberian and Panamanian flags and gone to the Greek flag because the Greek Government has lifted some of the taxes which kept people like Niarchos and Onassis from putting their ships under the Greek flag. That has been remedied since, some 2-percent taxes and a few others and they are now under the Greek flag but are trading on the same routes. We have a list and we have marked out for the record the vessels which were former American-flag ships, transferred, and then Liberian flag and thence to the Greek flag. We have them marked out. They are the Penelope-there are a lot of them. They are marked out with an asterisk. There are quite a number of them. These vessels are trading behind the Iron Curtain and have been trading behind the Iron Curtain and are now, many of them, engaged in the Cuban trade from behind the Iron Curtain. While it is very difficult for a layman, or our organization to de- termine the corporate structure behind many of these operations, there are many of these Greek operators who have financial tie-ins with American corporations. One of them is Onassis, Niarchos, Livanos, Orion Steamship Co., and Kulukundis. These are the oustanding Greek operators who have ties with the American operators. I can read these off. We have them marked with asterisks. As a matter of fact, it has been brought to my attention that Onassis still owes this Government quite a considerable sum of money on a number of these vessels that were transferred and sold over to him. 77836-62-pt. 3-6 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 714 EXPORP CONTROL ACT OF 1949 Mr. KITCamN. Is there any information contained in the exhibit that you will offer for tl.e record now that shows the identity of the American interest involved in these respective transactions? Mr. CTRRAN. No, not on these listings, but we know them and Lloyd's Registry and the; American Bureau of Shipping and the Maritime Board's records will show the history of these vessels and their transfer and sale. They have those records. I am sure they have those records. They should have them. They were American vessels. We have taken a great many steps within what is within our rights we feel as free trade unionists in a free country to make: our protest and we have contacted international organizations, of which we are a part, such as the International Transport Federation and we have called for a boycott of these trade unions in the free countries, similar to those boycotts which we established against such Fascist oper19 - tions as the Dominican setup, the Argentina group, Spain and others in times past, very successful boycotts have been organized but in this situation I heard one of the previous gentlemen who was on here, one of the Members of the Congress, bring to your attention something which we were not aware of and which we find very difficult to believe. We hope he has got later information than we have. The Norwegian Government, as far as we know, has simply said that they have no control over their shipping and that as far as they were concerned this question of Cuba and the United States was a political problem of the United States. We have not been able to get a meeting of the International Trans- port Federation on this question, even though as affiliates we have the right to request suc a meeting. There have been great pres- sures brought to bear to prevent such a meeting from taking place. We have, however, received assurances from individual groups, such 4s the Pan Hellenic Federation of Seamen of Greece. Thpy sent us a wire just the day before yesterday in which they said the Pan Hellenic Seamen's Federation agrees with our proposal to set a worldwide boycott against loading military equipment and per- sonnel: to Cuba. The boycott must be organized by all unions in NATO countries without exception and while steps are taken to protect against unemployment of the crews affected by such action. Having been in the forefront of Greece's battle against Communist invasipn, we are fully aware of the dangers to the free world by the Communist bridgehead in Cuba. It is signed by the head of the Pan Hellenic Seamen's Federation. Mr.KrTCriIN. Is that a condition precedent to their entering into this agreement, that all NATO nations must be in without excep- tion ? Mr. CURRAN. I am nct in position to say what their intent was behind the wire. We have talked to them on the phone since. They have made no conditions. They have assured us that if such a meet- ing takes place and as far as they are concerned their vote will be for a .boycott. That is what Mr. Petroulis, the chairman of the Federation of Greek Seamen has assured us. In the meantime, we on our own went to work on a couple of vessels that were here, cne in Corpus Christi, a West German and one inIIouston, a Yugoslavian vessel. Then we had one of our own Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 715 which was engaged in a peculiar operation. It was loading some 2,500 tons of material, sodium sulfide, which is used for the curing of hides, and the tanning of hides. The peculiarity of this was it was assigned to Leningrad and at the same time had marked on it Havana, Cuba. The cargo and the crew notified us of it and we notified the com- pany that as far as we were concerned that unless we received assur- ances from the State Department that that cargo was not being assigned to Cuba and that it was properly licensed and the things that were necessary we would not release the vessel. We received the assurance from the State Department, or from the Department of Commerce that it was properly licensed and it was not heading for Cuba but was heading for Leningrad, the textile and leather industry of the U.S.S.R. They gave us copies of the bills of lading. The Department of Commerce gave us these. The Di- rector of Export License Control of the U.S. Department of Com- merce gave us these, Mr. Hockersmith supplied us with these docu- ments. The vessel is cleared. She has gone. No one can guarantee what becomes of the cargo after it gets to Leningrad. Mr. KITCIriN. Did you try to verify or investigate the predetermined listing of Havana or for Cuba on the cargo itself ? Mr. CURRAN. Yes. We tried to find out about that but as far as we could discover there was no explanation for that marking on there. Then they assured us it was not even going to Leningrad, that the cargo was going to be dropped in Guttenberg, Norway. As far as we are concerned Norway is one of the biggest operators into the Cuban situation; incidentally, one of the biggest operators in this country. They operate a merchant marine operation in this country for many, many years in which their vessels are trading on what they call the North Atlantic and U.S. run. They do not go home for 5 years. When vacation time or relief time comes for crews, they fly them home and they fly a crew here. They have as many as 260 voyages in 1 month out of the New York area, constantly on American cargo. That has been going on for 50 years. This is the country that lives off American cargoes; that is, the shipping companies. At the same time they operate one of the biggest operations in the Cuban trade. We have a communication from the Embassy of the Federal Repub- lic of Germany, addressed to us, concerning the Caterina Olendorff in Corpus Christi, and it referred to the conversations we had and it says that the present voyage of the ship aroused the interest also of Con- gressman Paul Rogers : As agreed on with Mr. Perry- My assistant- I enclose herewith a copy of a letter written yesterday to Mr. Rogers. After we had been in contact I may draw your attention to the attached aide memoire presented to the Department of State 3 days ago. In addition, I am in position to inform you of a cable which the Norwegian Embassy received this morning from the Foreign Office in Oslo, for information of this Embassy and on the basis of which I can now confirm to you that the Caterina Olendorff under char- ter of the Norwegian State Grain Monopoly will sail directly from Corpus Christi to Norway for delivery of grain to the State Grain Monopoly there. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 716 EXPORT CONTROL ACT OF 1949 I might say to you the State Grain Monopoly does not mean the product is going to be consumed by the Norwegians but is the same as the copper which comes through to the United States in bond, which we bring up from the west coast of South America and lays in barges in New York and then is transshipped to Europe, which is an old trade and a proper operation. This is the same way. The product is shipped to a European warehouse and from that European warehouse it then goes to other destinations around the world and they make their! nickels off of it as it passes through these operations, I assume,, like a middleman. The flour on the Yugoslav vessel was assigned as we understand. it to Cuba first and the:1 they transferred it. It was going to Egypt. We have a great deal more information, but most of the informa- tion has already been supplied, percentagewise, numbers that are, operating in this trade, They are already made a matter of record. We feel that this is a very, very serious situation and we feel like we felt in every situation. You cannot be anti-Communist in the daytime, and go to bed with then at night. You cannot say, for example, like, they do to our seamen, that you have got to pass certain security measures before you cr,n even be a seaman. You have to be inves- tigated to see that you are loyal and that you have no ties with com- munism and at the sane time send cargoes into vessels which.are manned Liberian-flag v,,ssels, for example, which are manned by crews. that are picked up anywhere in the world. We have a great de il of respect for seamen in general but let's not kid ourselves, sears en. are seamen and 50 percent of the seamen in Italy, for example, which a large majority of Liberian vessels carry, are from the Communist seamen's organizations or seamen's domination in Italy. We support an Italian seamen's union there that is doing a groat job in working to eliminate the Communist seaman or Communist cominated, but they find it very difficult because the employment oppon;unities go mostly to these people. For some reason or other the Lib(rian-flag ships and others seem to hire more in the direction of the Communist-dominated seamen of Italy than they- do in the anti-Communist. Mr. KITCmN. Is there any particular organization that is Com- munist dominated that you could name? Mr. CURRAN. Yes, they are part of the CIT of Italy. I might not be pronouncing that e) actl.y right. It is the Communist Federation of Italy. They are all combined, the dockers and seamen. In this. country the seamen are in separate organizations. In those coon - tries they have what they call the Seamen & Dockers Organization. They are combined in many of those countries in one organization. Mr. KnTCHIN. I am particularly interested in two phases of your- testimony outside of your statement, one concerning the information received by your peop le concerning this shipment to Norway or toy Leningrad, with the indication with reference to the cargo that it was marked for Havana or Cuba. Was that on the cargo, the contents itself; was it mentioned on the manifest? Mr. CURRAN. It was on the drums. When our crew is aboard ship they do not. miss anything. Crews never miss anything. They spotted`. these drums and they a.-e always marked on the heads, the destination,, weight, and all that. 7'liat is right on the top. They spotted Havana, on there. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2 Q1#I1 6?P0 %3R000100130941-8 Mr. KITCIIIN. There has been no explanation to your satisfaction as 4 to this? Mr. CURRAN. There is no explanation to our satisfaction of any cargoes that go overseas. I can remember a cargo that was destined to China a number of years ago and one that caused our ship to be shot through the galley. We had to get the crew off in the Far East and bring it back. That cargo was sold to five people an route but never left the ship. It was sold to people in Karachithe people in Karachi sold it to people in Hong Kong, and from Hong Kong it was sold into Red China. We, at that time, were asked to deliver that ,cargo up the Yangtze River and the refusal on the part of our crew to operate of course carried possibility of mutiny charges with it. The Nationalist Chinese fired a shot and although I won't say much for their aim, they did enough. damage to cause the ship to turn around and come back out. They fired a shot through the galley, which is the most important place to seamen. They turned it around and brought it back to Singapore. Our crew got off. That com- pany turned around and attempted to sue those seamen for desertion, et cetera, but in court the court ruled they had a right to get off. Cargoes going overseas, as far as we are concerned, you do not have any effective control on the cargo once it leaves here, just like we have no effective control over shipping that is under the flag of Liberia, Honduras, or any of these countries once it gets away from the dock. Honduras, right today, which has received a great deal of support from some Government agencies, even to the point of stopping an selection that we had on a group of Honoduran ships, Honduran-flag .ships, are now faced with the fact that the Legislature in Honduras has before it bills expropriating American property in Honduras, including the famous United Fruit Co. Mr. KITCrrIN. Of course, this committee has jurisdiction and a very definite interest in the transshipment of cargo, as you know, and under the Export Control Act and the licensing procedures inaugu- . rated and implemented by that act, the transshipment and the en- forcement of the licensing provisions to see that no transshipments are made has been of very grave concern to this committee. We have been pondering the same conclusion that you probably reached here as to how effective can a control be of these transship- ments? Your statement, with reference to the many ports and sales of the commodity on the ship without the commodity leaving the ship, is indicative to me that the effective control of transshipments is some- thing that is rather negligible at this particular time. Mr. CURRAN. I would like to bring one other ship to your attention that we received this morning. This is a Greek ship. She loaded 400 head of purebred cattle in Canada for Cuba. This is the largest amount of purebred cattle to be exported from Canada. The gentleman going with the shipment is a gentleman by the name of Tom Hughes. The name of the ship is the Alandria. She is a, German ship ; then the Greek ship is the SS Pamit, and they had an argument, occur be- tween the skipper and the crew on that ship. A part of the crew refused to sail with it because she was destined to Cuba. They re- placed them with Cuban nationals. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 fff roved For Re lllRpgpT2N?%?4A2A: IArR r45B00383R000100130001-8 Mr. KITCirIN. How recently was this? Mr.. CURRAN. The 26th of September. We understand there are approximately eight Canadian vessels operating steadily in the Cuban trade, Canadian-flag vessels. Mr KITCIIIN. Before I forget it, what part of the information there do you care to have put into the record? Mr. CURRAN. I would like to have it all put into the record. Mr KITCnnIN. The material you read previously, do you want that all put into the record? Mr CuRRnN. Rather ;han read the list of ships, I will, if there is no objection, insert the 1 Ist in the record at this point. Mr. KITCHIN. We would be glad to have you insert that as part of the record but I wanted you to be selective as to what did go in the record. You had other rotes and copies of what appeared to be a man- ifest or bill of lading. If you will submit for the record what you want to go in we will put it in the record. Without objection, it will be admitted into the record. (The information referred to follows:) The following ships formerly under effective control changed from Liberian: to Greek flag and running ini o Cuba : SS I?enelope (freighter) (:'ormer Liberty vessel). In Neuevitas (Cuba) January 14. Sailed for Novorossisk, U.S.S.R. Passed Istanbul February 9. (Lloyd's, October 1962.) SS Delphi. Cuba, January 18 for Genc?a. (Lloyd's, October 1962.) Aldebaran-Liberian charged to G_?eek flag March 7, 1960. Sailed from Novorossisk : tay 11 to Havana. (Lloyd's, May 25, 1962.) SS San Spyridon-Lebanese flag. Liberty, tonnage, 7,262. Built July 1943, Baltimore, Md. For W.S.A., under name of William H. Jackson. Last under American flag, 1945. Operated by T. J. Stevenson. Since then laid up until 1917. In 1947 renamed Aristocrotes, by Aristomels Co., Panama. Port of Cortez, Honduran :lag, at that time. In 1960 changed over to the name of San Roque under Panamanian flag. Owner in 1960, Phoenix Compania De Navigation, Panama Republic, Panama flag. In 1961 changed name to San Sppridon. New owner Olistim Navigation Co.. Ltd. Monrovia, Liberia, Lebanc se, Beirut, Lebanon. These people still have the ship. 1962 Lebanese flag. Havana June 1, 1962, for Odessa. LL-September 10, 1962, SS Antonia Liberty, in Havana, March 16,1962, to Whampoa. Ex John Consatine. Built 1943, Permanent Shipyard, Richmond, Calif. W.S,A., to Ishmian Steams hip Co., Frisco. In 1947 sold to Spyros A. Lemos, London. Changed name to Antonio, Chios, Greece, active till 1960. Sold to present owner in 1)60. Viasekura Compania, Nav!era, Panama., Republic of Panama. Liberian, Monrovia, Liberia. SS Atlantic Air, ex Elizabeth Blackwell. Liberty built 10143; tonnage, 7,255. Richmond Shipyard, Richmond, Calif. Owners : Atlantic Freighters, Monrovia, Liberia, 1962. Panamanian registration. W.S.A., Washington., D.C.. 1944. Named changed to Atlantic Air, 1946. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2DIM05Lt&TCdA-1?4DP6i5EIQU83ROO01 00139991-8 Taken over by Atlantic Maritime Co. London, Panamanian registration, Panama. Registered as Atlantic Freighters, Marovia,1954. Registered Panama. Same owners, 1962. Flying flag of Panama. From Prince Raymont, Canada, to Havana-Arrive April 21, 1962. S. Livanos, Ship Brokers Ltd., London. Liverpool December 16, 1961, for Havana ; arrived January 22, 1962. LIB--- January 26, 1962. SS White Sea, Liberty in Havana, Cuba, June 15, 1962. LL March 22, 1960. Ex Amy Lowell, built 1943, California Shipyard Corp. Ex Nevada 1948--60. W.S.A. owned, operated by Seas Ship Co. (S.I.U.). Laid up James River June 8, 1940. Sold 1948; Danish flag to 1960. White Sea 1960 ; Liberian United Shipping Co. Monrovia. Havana June 15, 1.962; sailed Yokohama August 18, 1962. LL August 10, 1962. SS Atticas. LL May 4, 1962. Ex Harmony. Ex Leo Poldskerk, Lebanese flag. Tanker, 890 ton ; built, Bethlehem Corp., Sparrows Point, Baltimore, Md. Harmony, Name at that time 1943 for Gulf 011, New York. Sold to H. N. Vereenigde, Netherlands, Sheepvarrt, The Hague, in 1948. Sold in 1960; name changed to Atticas. Owner, Concordia Shipping Corp., Monrovia, also known as Vita Ship Corp. Book Panama, Greek Ships 61, page 609. March 16, 1961. This ship went from Rangoon to Havana, Cuba. LL April 28, 1961. World Cavalier, Liberian tanker. LL, September 7, 1962. Liberian flag. Built 1943, Sun Shipyard Chester, Pa., tonnage 12,805. Panama, Republic of Panama, Monrovia, Liberia. Sailed Victoria July 29, 1962 for Szczecion. LL August 10, 1962. Sailed September 7, 1962, Gdynia, for Philadelphia 4. Iron Curtain not Cuba. Dead- weight tonnage Ships transferred from Liberian to Greek flag, January 1962-June 30,1962: Penelope I (freighter) ------------------------------------------------ World Olen I (tanker)---_-_-__ ___ -_ --------------- - -- Propoldis I (freighter)------------------------------------------------ Pearl Haven I (freighter) --------------------------------------------- Pearl Creek I (freighter)______________________________________________ Pearl Clipper I (freighter)-------- _-?-----------------?_ - Pearl Beach I (freighter)___-__?____?---------------------------_-?-- Pearl Sea I (freighter) -------------------- - --- ------------------ Apollon I (freighter) --------- --------------------------------- Enotis (freighter)------- --------- -------------------------- Armar (freighter)---, Emblem I (freighter)______________ Ekali (freighter) -------------------------- ------------ Dona Margarita I (freighter) ----------------------------------------- Ocean Seigneurs (freighter)__________________________________________ Ships transferred from Panamanian to Greek flag January 1962 to Juno 30,1962: Phoinix (tanker) ----------------------------------------------------- Uranos (freighter)-_____-_-___ Capetan Petros I (freighter)________________________________________ Entopan I (freighter) -------- ------------------------ 1 ship transferred from Honduran to Greek flag: Aurora (freighter) -------- ------------------------------ Ships transferred from Panamanian to Greek flag January-December 1961: Vori Niritos Michael O St/rs8 I_________ _____ Koumiotissa--------------------------------------------------------- See footnotes at end of table. 10,400 20,400 10,200 12,800 12, 800 12:900 12,800 11,600 13,600 14, 900 8, 562 13,900 10,900 8,700 14, 600 16, 400 10, 700 10,900 10,362 10, 500 2,200 10,900 10, 600 10,800 February 1962. January 1962. March 1962. Do. Do. Do. Do. Do. April 1962. Do. May 1062. June 1962. Do. May 1962. June 1962, June 1962. May 1962. April 1962. March 1962. January 1961. May 1961. Apr. 7, 1961. August 1961. Sept. 30, 1961. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Affloved For Re1p j10O1:AAIIA?jDQ 00383R000100130001-8 Dead- weight tonnage Ship transferred from Honduran tc Greek flag January-December 1961: Tleoforas---------------------?------------------------------------ Ships transferred from Liberian to Greek flag, January-December 1961: A9ia Irene '----------------------------------- --------- I----------- Artdalusia----------------------------------------------------------- A4oula A., ---------------------------------------------------------- Rdhalnna ---- ------------------------------------------------------ adpe Drepanon------------------------------------------ ------------ Captayannis------------------------------ --------------------------- Kadmos (tanker)-------------------------- -------- ------------------ Periolos-------- ------------------------------------------------ World Unity (tanker) ------------------------------------------ World Enterprise I (tanker)----------------.-------------------------- Spartan-------------------------------------------------------------- Panaghia ' (tanker)-------------------------------------------------- Mparmpa Christos I--------?--------------------------------------- Dona Caterina I--------------?-------------------------------------- Yiannina------------------------------------------------------------ E ,e II' E aterini C----------------------------------------------------------- Neptune------------------------------------------------------------- Norlandia----------------------------------------------------------- Korthi--------------------------------------------------------------- YVapantii------------------------------------------------------------ 7akyathos------------------------------------------------------------- Ntcolaos TsaulirisI -----------------------.--------------------------- Nostos (tanker)------------------------------------------------------ Panagathos---------------------------------------------------------- Isobel'------------------------?------------------------------------- World Dale (tanker)------------------------------------------------- Atrotos i (tanker) ---------------------------------------------------- Clytia (tanker)------------------------------------------------------ SQunietis--------------------------------------- --------------------- Delphi'------------------------------------------------------------- Leto (tanker) -------------------------------------------------------- P-1cione (tanker)------------------------------------------------------ Aetraea (tanker)---------------------------------------------------- Iolcos (tanker) ------------------------------------------------------- World Mead i (tanker)----------------------------------------------- I)ione (tanker) --------------------------------------------------- Serre---------------------------------------------------------------- Eveia---------------------------------------------------------------- Piraeus-------------------------------------------------------------- COnstantinople------------------------------------------------------- .Mesologi-------------------------------------------------------- North Countess I-------------- -------------------------------------- .ZSOStis I -------------------------------------------------------------- Polyxene C.'--------------------------------------------------------- .Michael C.'---------------------------------------------------------- .Doric---------------------------------------------------------------- Panther (tanker)----------------------------------------------------- World (;lade ' (tanker) ----------------------------------------------- World Concord ' (tanker) -------------------------------------------- Venus I (tanker)----------------------------------------------------- Sophie C --------------------------------- --------------------------- Ulysses I----------------------- -------------------- '------ Kronos---------------------- ---------------------------------------- Karala: ----------------------- --------------------------------------- 15emos------------ ------??-------------------------- Kgma----------------------? Adios Nicolas --------------------------------------------------------- Michael Carras (tanker)------------------ --------------------------- 10,900 January 1961. 10, 800 March 1961. 10,800 January 1961. 9, 200 Do. 10:800 Do. 10,300 Do. 9, 700 February 19811. 21, 500 March 1961. 11,000 Do. 31,700 January 1961. 33,000 Do. 12,400 Do. 24,800 February 1961. 14,600 March 1961. 14,800 Do. 12,700 June 1961. 10,600 May 1961. 11,100 Apr. 4, 1961. 12,000 April 1961. 10, 900 May 1961. 10,800 April 1961. 10,800 May 1961. 15,100 June 1961. 10,500 Do. 19,800 Do. 12,400 Do. 14,800 June 1961. 20,500 July 1961. 20,000 August 1961, 40, 900 September 1961. 15, 300 August 1961: 10, 000 September 1961. 19,800 July 1961. 19,800 Do. 19,900 Do. 19,900 Do. 20.500 September 1961. 19, 800 July 1961. 12,600 June 7,1961'. 12, 400 June 17, 1961. 15, 200 August 1961:. 15, 200 September 1961. 12, 400 July 1, 1961. 15,200 September 1961. 10,900 Do. 13,900 August 1961. 11, 000 September 1961. 10,800 July 1961. 24, 800 October 1961. 20,500 Do. 31,800 November 1961. 20,300 Do. 16,400 Do. 12,400 Dec. 5, 1961. 9, 500 Dec. 27, 1911. 12, 300 Oct. 10, 1961. 10, 900 November 1961. 10, 900 June 24, 1961. 10, 400 Oct. 7, 1961. 40,900 October 1961. I Traded with Iron Curtain couitries. 2 Date not reported. Mr. CURRAN. They carried 300 head of cattle from Alberta and 60 from Ontario. Mr. KITCIIIN. Do you have anything further? Mr. CURRAN. No. Mr. KITCFIIN. Mr. Boland? Mr. BOLAND. Do you know, Mr. Curran, whether or :not the entire merchant fleet carrying or flying Panamanian, Liberian, and Hon- duran flags is considered under "effective control"? Apprpved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release e~$ 0t%1 rRgAA PI 5 383R0001001,7QQ01-8 Mr. CURRAN. Not the entire fleet, no. I think about 350 to 400 ships of that group are supposed to be under "effective control" but we have always said "effective control" means only that at a time of disaster you have it in your backyard. If it is anyplace on the open sea, it can be anybody's "effective control" who gets to it first. Mr. BOLAND. If you have some of the Italian Communists manning Liberian ships you cannot consider them as being under "effective control." Mr. CURRAN. No, nor with Hong Kong seamen or any other seamen for that matter, until they determine who they are loyal to at the time that disaster strikes and who gets to it first on the high seas. Mr. BOLAND. Are these the only nations where the United States considers their vessels or some of their vessels as being under "effective control" or are there other nations which do not fly these flags? Mr. CURRAN. I do not think they have any deals with the maritime nations of the world; only those runaway flag vessels, that is all. Mr. BOLAND. I was interested in your observation on Norwegian shipping. I noted in Congressman Rogers' testimony here he indi- cated that only 9 percent of the trade with Cuba is carried in Nor- wegian vessels. Does that seem to be a rather small percentage to you? Mr. CURRAN. It does to me, yes, but we, of course, are not in position to get the information as Government agencies like CIA and others are. I assume they have full information that Congressmen might be able to get a look at. I do not know. We certainly would not. We have to do the best we can through our grapevines. Mr. BOLAND. We think you do pretty well. Mr. KITCZIIN. If the gentleman will yield at that particular point, I will say the Maritime Administration submitted a report on Sep- tember 24, 1962, wherein they carry under the Norwegian flag 16 ships, constituting 9 percent, and number of trips made, 18, consti- tuting 10 percent of the shipping into the Cuban ports during this period of June through August 1962. Mr. BOLAND. I have no more questions. Thank you, Mr. Curran. Mr. CURRAN. I want to repeat and make this very emphatic that there are great cargoes carried out of the United States to other points throughout the world and then transshipped to these points and nobody has convinced me yet that after the cargo is sold from here that we have any "effective control" on its consumption after it leaves here. I would like to be corrected in that. I haven't been able to find anywhere where licensing or selling has with it condi- tions that make for the consumption or use of the product in the destination for which it was licensed to be carried. Mr. KITCIIIN. That, of course, as I said before, has been a problem of this committee in its consideration of the export control procedure whereby the Department of Commerce, in issuing,or authenticating a license, they say they have the assurance that there will be no trans- shipment. However, they say they also have elements of enforce- ment in the respective countries to check on the transshipment but as I said before, in my own opinion I take a very dim view of the actual control of that type of enforcement procedure. We are very interested and vitally interested in that as being a part of the juris- diction of this committee in looking into the implementation and op- eration of this Export Control Act. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 App 2ved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 Mr. BOLAND. May I ask one more question? Mr. Curran, what is the size of the U.S. merchant marine fleet, a rough guess? 1\ r. CURRAN. Right, now we have approximately 915 vessels. It is difficult to say what the size is. Those records are readily available from the Maritime Board. I would like to mention one other country that is in this operation that has a number of vessels in the operation now that we have not been able to get too much information on but they are a big operator. That is the Spanish. There are a lot of Spanish vessels operating in that trade. Mr. KITCHIN. In tie Spanish category within the confines o~ this particular report just referred to the number of ships is 9 and the number of trips 12. The percentage is not given that have been en- gaged. This is just a two and a half month period, by the way. Mr. CrURRAN. Are the Japanese listed there? Mr. KITCFIIN. Yes. They list a number of owners or agents, four, the number of ships, seven, and the number of trips, seven for the Japanese. Mr. Lipcomb? Mr. LrrscohrB. Mr. Curran, do you know whether at any time that the Department of Ccmmerce or any other Government agency has contacted the Lon.gsho:'eman's Union or crews in regards to following up on these transshipments that you were speaking about with the chairman? Mr. CURRAN. No, I do not, sir. As a matter of fact, we wired the Department of Commerce with respect to this Norwegian situation when the Norwegians turned down Secretary Rusk at his meetings in New York. We wired them that if they are going to act in that manner that we ought ;o take up the question of the great living they are making with their shipping in and out of the United States on a permanent basis, but we have never been contacted by any department of Government on any question. We have had to contact them, when we stopped a ship for example. that we feel was not legitimate. The Corpus Christi ship, there were conversations going on between ; the State Department and the West German Government. As a matter of fact, the Ambassador said that "We never talk to laymen. rYo never talk to any unions or organizations like that," so we said, "As long as you won't talk to us, we will leave the ship tied up there," and they finally did talk to us. Mr. LrnscoMB. As far as you know no investigation by any Govern- ment: agency has ever been made to determine through the sources you have of end use of expor;s from the United States? Mr. CURRAN. I am nct able to say anything on that. We have no contact with them on that. Mr. LIPSCOMB. On. this shipment to Norway, is this an American vessel? Mr. CURRAN. The Mo nrmacpenn. Mr. LIPSCOMB. Yes. Mr. CURRAN. On thesodium sulfide? Mr. LIPSCOMB. The on?e that is going to Leningrad. Mr. CURRAN. That is the 111oo7macpenn. Mr. LrrscoMB. It has ? n American crew? Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 200x/% / 2 - P A PN5RR 98 9R00010013009 p Mr. CURRAN. Yes. We have all the assurances we can get from the Department of Commerce, with bills of lading and all to show it is a proper shipment, properly licensed, and telling use to mind our own business. Mr. LirscoMB. As you indicated you have ways to find out whether they follow through or not. Mr. CURRAN. We can send a message around the world in 10 minutes and get one back in 5 from the grapevine but as to its authenticity, that is something else on some of these things. Mr. LrnscoMB. On this list of vessels flying under these other flags that you have put in the record, do you have any way of knowing the type and kind of cargo that was carried into Cuba by these ships? Mr. CURRAN. We could get some idea but we do not have it right off. There were technicians in some shipping, there were technicians :and in other ships there was oil, there was material, called here defense material, I believe. It is listed as defense material, I think, Cuban defense material. Mr. LzrsCOMB. Thank you, Mr. Chairman. Mr. KITCIJIN. Are there any other questions? Mr. BOLAND. No, thank you. Mr. KITCHIN. I certainly want to express the appreciation of this committee, Mr. Curran, for your appearance this morning. You have given us a lot of very valuable information and I for one would cer- tainly be interested in your around-the-world trip in 10 minutes to see what can happen to this cargo, authentic or otherwise. It would certainly be interesting to me. I do not mean it facetiously. I mean particularly in connection with this committee's direct responsibility of the so-called transshipment and enforcement thereof, Mr. CURFAN. We will be pleased to cooperate as American citizens in every way possible with the Government agencies interested in this, including your committee. Thank you very much. Mr. KITCI UN. Thank you very much. We appreciate your attend- ance. Thank you for coming. The next witness is Mr. McAllister, chairman of the American Committee for Flags of Necessity. STATEMENT OF BRECK P. McALLISTER, CHAIRMAN, AMERICAN COMMITTEE FOR FLAGS OF NECESSITY Mr. McALLIsT1R. Mr. Chairman and gentlemen of the committee, my name is Breck P. McAllister. I am chairman of the American "Committee for Flags of Necessity. Our committee is comprised of the following 17 American industrial and shipping companies which, if you will bear with me, I should like to read into the record: Alcoa Steamship Co. Inc.; American Oil Co.; the Atlantic Refining Co.; Bernuth, Le,mbcke Co., Inc. ; Cities Service Oil Co.; Gotaas-Larsen, Inc. ; Gulf Oil Corp. ; Marine Transport Lines, Inc.; Naess Shipping Co., Inc.; National Bulk Car- riers, Inc.; Paco Tankers, Inc.; Richfield Oil Corp..; Socony Mobil Oil Co., Inc.; Standard Oil Co. (New Jersey) ; Standard Oil Co. of California; Texaco, Inc.; Tidewater Oil Co. My reason for wanting to read those names, Mr. Chairman is simply this: If Mr. Curran thinks that companies of that standing and loyalty to our country Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 72 A proved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 LXPOR' CONTROL ACT OF 1949 are going to be hiring Co a7munist crews I would like to say to him he doesn't''-. know what he is talking about. They are not Communist crews.. I want to make that statement as flatly as I know how to make it. These men are carefully screened by the companies, by our oven. Department of Justice, to secure landing permits and identification cards, by the State Department for security risks before issuing non- immigi'ant visas to secura landing privileges in this country. I am getting a little tired of hearing these loose charges made without any support whatsoever. Mr. BOLAND. Are they all nationals of either Panama, Liberia., Honduras, or Mr. MCALLISTER. No, Mr. Boland, they are not. Mr. BOLAND. Are there any American members of the crew? Mr. McALLISTER. Ver;l few, very few. The crews are foreign. Many of them are Italian, many of them. are British, many of them are West German. I would say most of them are from our NATO allied countries. Mr. (ITCrmmx. And did I understand you to say that they are ade- quately, in your opinion, screened by the State Department and the other official agencies of the Government for landing privileges here. in this country ? Mr. ;MCALLISTER. I diin't want to say that they are adequately screened because-- Mr. i(ITCmIN. I mean to your own satisfaction. Mr..MCALLISTER. We make the basic screening ourselves. The member companies do. We do more than depend upon the Naturaliza- tion Service of the Department of Justice which deals only with land- ing privileges in this cour.try to secure a landing permit and identifica- tion card. A foreign seaman must be cleared by our Naturalization Service and the Department of State likewise clears alien seamen before; securing what is called a nonimmigrant crewman visa. This is important. It is a check by our Government. But the basic screen- ing, Mr. Chairman, is done by the companies themselves in hiring these men. That is the point I want to make and impress upon this select c+ommittee if I may. Mr. ICITCHIN. All right, you may proceed. Mr. 1VICALLISTER. In the' aggregate these companies hold ultimate ownership of 194 vessels of a total tonnage of more than 6.7 million deadweight tons. All of these vessels are bulk carriers of oil, iron, and bauxite ore, coal and other bulk cargoes. Eighty-six percent of them are tankers and the other 14 percent are ore carriers. To complete my statistics, 126 of these vessels are registered under the Liberian flag and 68 of them under the Panamanian flag. My purpose in being here is to record with your committee the sub- stance !of my recent telegram dated September 26 to the President. This 'yas sent by me as chairman of our committee for two purposes. First, to assure the President that our group gives its full support to, our country's efforts to halt trade with Cuba. Second, to make it a matter; of public, record that the allegations that have a.pneared in a few instances in the press are totally unfounded and erroneous insofar as they infer or suggest that any of these ships have been engaged in the Cuban trade at any time since the Communist influence became apparent there. .Actually, that was one reason why I wanted Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12: CIA-RDP65BOO383ROO0100130001-8 EXPORT CONTROL ACT OF 1949 725 to read the list of my members into the record at this time. Many of the members of this committee are prominent American oil companies and it is just plain ridiculous to suppose that any of these companies or indeed any other members of our committee would carry petroleum products to feed refineries that were confiscated from two of our mem- bers and a third from another international oil company. Shortly following this seizure in July of 1960, it is a matter of public record that two of our leading member companies issued individual state- ments in which they took a strong stand against any transport of Soviet oil to Cuba. It is equally ridiculous to suppose that any other American oil company or independent shipowner doing business with oil companies would engage in that trade. This is the substance of my telegram to the President which I offer in the record of this hearing. May I hand a copy to the reporter, Mr. Chairman? Mr. KiTCZUN. You may, indeed. Without objection, it will be entered into the record at this point. (The telegram follows:) NEW YoRK, N.Y., September 26,1962. THE PRESIDENT, The White House, Washington, D.C. My DEAR MR. PRESIDENT: As American citizens whose prime concern is the national security and welfare of the United States, members of the American Committee for Flags of Necessity deplore recent statements by certain groups which imply that vessels beneficially owned by committee members and flying the flags of Liberia and Panama are involved in trade with Cuba. The committee, which is comprised of 17 American. Industrial and shipping companies, views these statements as totally unfounded and erroneous. These vessels are not en- gaged in the Cuban trade, and have not been since the Communist influence in Cuba became apparent. Furthermore, committee members have individually determined that these vessels will not engage in any future trade with Cuba unless and until such trade is deemed to be in the best interests of the United States. The vessels represented by the committee constitute almost 65 percent of the total tonnage in the "U.S. Effective Control Fleet," and are considered by U.S. Defense officials: to be a vital segment of the reserve merchant fleet available to this country in event of war or national emergency. The 194 Liberian and Panamanian registered vessels in which committee members hold interests total more than 6,700,000 deadweight tons and are essentially all large, modern, high-speed vessels, more than half of which have been constructed during or since 1956. These vessels are entirely tankers and ore carriers. It is inconceivable that such vessels, owned or primarily chartered by American companies, would be used to carry petroleum or ore to Cuba when that country has confiscated the installations and properties of some of these same companies. The decisions of individual committee members make it entirely clear that these vessels are not and will not be engaged in such trade. Respectfully, BRECK P. MCALLISTER, Chairman, American Committee for Flags of Necessity. Mr. MCALLISTER. To sum up our position, the individual members of our committee have made it entirely clear that these vessels have not, are not, and will not be engaged in the Cuban trade. Mr. KITCIIIN. I would like to clarify this particular point, though it may be clarified later on in your statement. We have talked about the ridiculous position that the oil companies would be placed in, to transport oil to Cuba. In the forepart of your statement you mention that the vessels that your association or committee is concerned with- Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 72G proved For Release EXPORT NTROL 2005/05/1AC: -R~.65B00383R000100130001-8 you say, "All of these vessels are bulk carriers of oil, iron, bauxite,, coal, and other bulk cargo." Now,I hope somewhere in your statement-if not, you could clarify it for the record here-that with reference to iron, bauxite ore, coal, and other bulk cargoes that they are in the same category with the oil shipments. If I am correct you may proceed. Mr. MCALLISTER. Mr. Chairman, I can correct that right now. If I left any such misapprehension I had no such intention. I am not aware that there are any needs for iron and bauxite ore in Cuba at all.. I may be wrong about thf,t but whether I am right or wrong about that I would say that precisely the same statement applies to these other bulk commodities in trade with Cuba. Mr. KITCxrx. No ship of this ownership by this committee which you represent has been plying trade with Cuba for any commodity I Mr. NIcALLrsTER. None whatsoever. Mr. KrrduIN. You may proceed. Pardon the interruption. Mr.11 CALLrsTER. I welcome the interruption because I wanted to be, very clear on that point. An additional important point that I want to impress upon your committee is that these 194 vessels comprise almost 65 percent of the, total tonnage in the "U.S. effective control fleet." This fleet is re- gardedby our Defense and Navy Departments as an essential part of- the merchant fleet upon which our country relies in the event of war or other national emergency. We are carrying out our obligations as a part of that merchan ; fleet and we intend to continue to do so. It maybe that your committee is not aware of the fact that the only foreign-flag vessels owned by Americans that are in this position are those that are registered Under the flags of the three friendly nations of Liberia, Panama, and Honduras. If these vessels were registered under the flags of our NATO allies, or other foreign countries, they- would pot be under the effective control of the United States. Mr. Chairman, may I interrupt myself here to make clear that when I have used the expression "the effective control," of these ships I am talking about the control in terms of the Defense Department and the Na''y Department for the use of these ships in time of war or the national emergency. I am not referring to anything connected with the cargoes of these vessels. I would also like to say that the problem that your committee is most ctkicerned with is the positions that have been and are being taken by our NATO allies and other foreign countries. This points up the importance of the commitments made by American owners of ships registered under th 3 three flags of Liberia, Panama, and Hon- duras.. I want to make tie flat statement, Mr. Chairman, that to my knowledge no ship of any kind that is included in the effective control fleet has been named as having been engaged in the Cuban trade. I might interrupt here to say that you heard statements by Mr. Curran just a moment ago. I would like to call several points to the attention. of the select committee at this juncture. I notice that the report of the- Maritime Administration with which, Mr. Chairman, I believe you are familiar-I think you have referred to it-lists only four Liberian- flag ships making four voyages in the Cuban trade. Now, there is nothing in this listing h(re to suggest either that any of these four- ships were owned by American interests or much less that they were, Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Releasx3g.p~/ ;RoCfIAC t 51N383R000100'G bO1-8 to be regarded as in the effective control merchant fleet upon which we depend. There is no such suggestion. I would like to suggest most earnestly that this select committee consult the Navy Department. Mr. Curran made the flat statement that some ships that had been engaged in trade with Cuba were in the "effective control fleet." I treat that as a charge. I don't treat it as a fact because the Navy Department does know what ships. are in the "effective control fleet." Mr. Curran doesn't nor do I. I know that the ships of the members of my committee have been so, pledged and are included in that fleet and I assure this committee, as is stated in my prepared statement, that no vessel ultimately owned by any member of the committee of which I am chairman has been named and I am confident that none ever will be named. I have made the statement and I repeat it, that I am equally con- fident that no other vessel in the "effective control fleet" has been or ever will be named, though I have to admit that I am not in a position:. to speak for any American owners of the remaining 35 percent of the Liberian, Panamanian, and Honduran tonnage in that reserve fleet, They are not members of my committee and I simply cannot speak for them. But I most respectfully submit that if your committee has any evidence to indicate that any "effective control" vessels are en- gaged in the Cuban trade I am confident that an inquiry to the proper authorities at the Department of the Navy would produce the facts in lieu of unsupported charges. Mr. LIPSCOMB. Mr. Chairman, may I ask a question there? Mr. KITCHIN. Yes, indeed. Mr. LzrscoMB. None of the vessels named by Mr. Curran during his testimony are members of your committee? Mr. MCALLISTER. That is correct, Mr. Lipscomb. I happened to note as I listened to his statements they sounded to me like pretty old Liberty ships that by now were probably so obsolete that I would wonder if the Navy would want such old ships on its "effective con- trol" list, but I am positive that the Navy would be able to supply an answer to this committee. I sent a copy of my wire to the President to both the Secretary of Commerce and the Maritime Administrator. In response I received a wire dated September 28 from the Acting Maritime Administrator which I should like to offer for the record here because of its impor- tance. This states: Your telegrams addressed Secretary Hodges and this office today quoting telegram to President Kennedy September 27. Maritime Administration and Department of Defense have also corrected record created by charges that U.S.-owned Panamanian- and Liberian-flag ships are participating in Cuban trade. Ships your group have responded as we thought they would. The record and attitude expressed your wires both reassuring and gratifying: J. W. Gurrcx, Acting Maritime Administrator, Maritime Administration. I respectfully submit that these two agencies of our Government with the Departments of Defense and Navy are directly charged with the responsibility over the effective control fleet, and I submit further that they ought to know the facts. Thank you, Mr. Chairman. Mr. KITCmN. Thank you very much. I would like to ask one ques- tion merely for my own information and proffer it for the record : The Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Apffred For Rein R L ACT OF 1949 statement is that your committee with 194 vessels had a total of 65 percent of the total tonnage under the U.S. effective control fleet operating under these flags. Mr. MCALLISTER. T hat is right. Mr. KrrCHIN. How many ships are involved in the remaining 35 percent? Mr. MCALLISTER. Ttotal effective control fleet would be about 450. But we seem to have the larger ships in size and tonnage and that accounts for the difference, Mr. Chairman. Mr. KITC111N. So approximately 260 ships carry the remaining 35 per tent of the tonnage? Mr. McALL1sTFn. Tiat is correct and they are smaller ships. Mr. KITCxmN. Mr. Boland, any questions? Mr. BOLAND. I just want to compliment Mr. McAllister on his rather emphatic statement. _ think perhaps you have set at rest the charge that; the American-flag ships of the Committee of Necessity have been eng,ge.d in trade with Cuba. It is an effective answer to some of the statements that have been made with respect to the ships which are under the jurisdiction or command of the American Committee for Flags of Necessity flying Panamanian, Liberian, or Honduran flags. It is as effective an answer as I have seen and I want to compliment you :and your committee on the statement you have given this com- mittee this morning. Mr. MCALLISTER. T1 ank you, Mr. Boland. Mir. KITC111N. Mr. Lipscomb? Mt. LIPSCOMB. Mr. McAllister, is there any similar group to which this other 35 percent belongs? Mr. McALL1sTER. No. there is not, Mr. Lipscomb. Mr. LlrscoME. They are just free operators? M. McALLISTER. That is correct. M. LIrscoifB. This just refers to tonnage and not to number of ships. Is this 35 percent American-owned vessels flying under other flags? Mr. MCALLISTER. Under the Liberian, Panamanian, and Honduran? Mr. LIPSCOMB. Yes. Mr. MCALLISTER. Yes, they would be, Mr. Lipscomb. They would have' American ownership. I was really quite puzzled when I thought I understood Mr. Curran to refer to one Lebanese-flag ship as being in the effective control fleet.; That just could not be. The only three foreign flags that are recognized as being in this category are the flags of these three countries. There are no others. Mn LrrscoMB. Is it possible that some of the misunderstanding and a1legmtions that are coming about could be referring to some of these practices that are being _candled or contributed to by other parts of the fleet than these flags? Mn MCALLISTER. They might well be but I should add quickly that part of this other fleet ib in the effective control fleet so to speak. 1MIy pointis that there are Liberian-flag ships and Panamanian-flag ships that sire not in the effective control fleet. They are too old or for or_e reason or another they are just not regarded as the kind of ships that our Navy Department v ants for our defense and national emergency efforti and those might well be in this group of ships that, have been referred to. Apprpved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For R2kqp,%el,21 2A IA-PlQI?95B00383R00Qr2Wl30001-8 Mr. Lirscomn. The thing that concerns me is that we have a problem and we don't want to discount this problem because of the ethical nature by which your committee operates. It is my hope that we could get everyone to operate on this basis. But if there are American ships flying under these other flags, participating in trade with Cuba, this is the answer that we are trying to find and we need help in doing this. So we don't want to discount the fact that your committee is not trading and is making every effort to stop it, but we want to see what we can do about these others, if they are doing it. Mr. McALLISTER. I think this committee should be concerned with these others. Though I should add, perhaps, that. there is an im- pression that Liberian-flag ships are American owned, as though they were all American owned. They most certainly are not. The best figure that we can produce in our committee is that some 65 percent of the total Liberian-,. Panamanian-, and Honduran-flag tonnage in the world is foreign owned. It is not owned by Americans. It is owned by Greeks and nationals of all countries of the world. These ships are, of course, not included in the Department of Defense's or the Navy Department's effective control fleet. They couldn't be. It is only those that are under ultimate American ownership that are so included. And then again only a part of those. Mr. KITCHIN. Will you yield at that particular point? "Ultimate" American ownership. Will you define that for me? Mr. MCALLISTER. All I mean by that, Mr. Chairman, is that any American corporation which is conducting operations abroad will do it, for a great number of business reasons, through a wholly owned or partly owned foreign subsidiary and that is all I meant by that. Mr. LIPSCOMB. I have nothing else. Mr. KITCHIN. Mr. Boland. Mr. BOLAND. Can you say whether or not you can supply the com- mittee with any information with respect, to some of the countries with which you are familiar and for which your committee flies their flags, some information which you might have with respect to these ships outside of your own committee trading with Cuba? Mr. McALLISTER. We will see what we can do, Mr. Boland. Frankly, we don't really have much information along those lines. If we can find any I will assure you we will submit it to this select committee. Mr. KITCnIN. I can assure you that, this committee would be most appreciative if we could get that type of information. Mr. McALLISTER. It has been suggested to me, Mr. Boland, that the information about the "effective control fleet" that is not included in the membership of my American committee is probably available at the Navy Department. Mr. KITCxnN. Are there not American-owned ships that are flying under the flags of these three countries that.. as you say are so anti- quated as to not be included in the "effective control fleet" that prob- ably are being used in trade with Cuba? Mr. McALLISTER. Mr. Chairman, I simply do not know if that is a fact. If that were a fact, I would regard it as outrageous that an American citizen would invest his capital in a foreign-flag ship of any nationality and trade with Cuba in a manner contrary to the policies and indeed the proclamation of our President of last July. 77836 0-62-pt. 3-7 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approvq4gor Release 2Q A/ /1 LR9pl6WOgRp~R000100130001-8 Mr. KITCHIN I base that question, in a roundabout way-, upon the statement made by the former witness concerning the Greek ships that had been transferred back into the Greek flag now, due to the tax incentive or otherwise, which he inferred still have American interest if not control. I don't know whether the ultimate ownership in the category definition which you have just given would fit this particular situation but I was wondering if there were. categories where the ships under these flags where American interests may still be vested might possibly be used in the Cuban trade at this time. Mr. McATissrER. I can only say, Mr. Chairman, I have no factual data on that subject. I think that is surely a matter appropriate for the fullest kind of inquiry by this committee. I just cannot con- tribute anything to that. I noted that Mr. Curran was speaking only in the most general terms when it cfame down to basic factual information. I didn't think he had any. H left the suggestion of American interest, I thought, to inference and really suggestion on his part. Mr. KITCHIN There is an exhibit submitted for the record which I assume can be examined more closely and discussed with t lie Depart- ment of Defense-to try to come up with some answers on that. We certainly ;hank you for coming and being with us this morning and offering thi., testimony. Mr. McALLIS'R. Thank you. Mr. KITCmN. If it is satisfactory with the members of the com- mittee we will continue until we get a quorum bell. Mr. Joseph Kalrn, president, Committee for American Tanker Owners, New Y ark City. STATEMENT (IF JOSEPH KAHN, PRESIDENT, COMMITTEE FOR AMERICAN TANKER OWNERS, NEW YORK CITY Mr. KAHN. My name is Joseph Kahn. I am a shipowner operat- ing both dry cargo and tanker vessels. In addition, I am president of the Committee of American Tanker Owners, Inc., an organization composed of companies which owns modern American-flfg tankers. My purpose in appearing here is to submit certain suggestions how we can in large measure stop shipment being made to Castro's Cuba under existing law and without requiring the apparently unavailable cooperation of other nations. Shipping is the key to survival of Castro and communism in Cuba. Cut off' the supply of vessels available to him, and you cut off his ability to feed his population and to arm his followers. Shut off the supply of tankers to carry oil to the refineries, which he has con- fiscated from Arr.erican oil companies, and you will soon have a break- down in his tra..isportation and industrial system. Unfortunately, allied nations have been reluctant to join us in this fight against communism in Cuba by keeping their ships out of the Cuban trade, We have, however, a solution which I believe would result in keeping; most ships from serving Cuba and the Communist caus ith t e w ou need of resorting to allied help and without even need of change in existing laws. By way of background, may I give the committee. certain facts con- cerning the shipping industry. The largest volume of cargo shipped Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 EXPORT CONTROL ACT OF 1949 731 from the United States is grain and related agricultural products which are paid for by the Government of the United States and given to various foreign countries under our aid programs, principally under Public Law 480. Under existing law, at least 50 percent of these cargoes must go upon American-flag vessels. It is within the discre- tion of the administrative agencies to increase this figure from 50 percent to 100 percent. Of our country's imports, the largest ship- ments are of oil imported into the United States under the mandatory oil import program. Substantially all of this oil is carried into the United States by foreign-flag tankers; American tankers participate in this trade to the extent of only about 3 percent. All oil imported into the United States can be brought in only under license issued by the Interior Department. Without that license, no oil can be imported. It is, therefore, within the licensing power of the Interior Department to require that no vessel which has traded to or for the benefit of the Communist nations shall be permitted to bring in this oil. Put another way, the Interior Department can provide that no oil shall be licensed for import into the United States if it is carried on a vessel which has served a Communist nation. May I point out that the charter of vessels of other countries to the Communist nations serves the benefits of Cuba despite the fact that the vessels may not engage in the Cuban trade. For example, if a tanker is chartered to the Russians for use in carrying Russian oil to other countries, it releases an identical amount of Communist- owned tanker tonnage to carry oil to Cuba. For that reason, even if a vessel has not traded directly to Cuba in the carriage of oil, its charter to the Russians or other Communist countries to carry oil anywhere results in making Russian- and other Communist-flag tankers avail- able for carrying oil to Cuba, which Communist ship would have not been available except for the charter of the foreign ship. Mr. Chairman, may I digress for just 1 minute at this point: Several suggestions have been made in connection with what is the best cure in preventing the ships going to Cuba. One of these sug- gestions has been in cutting off foreign aid to those nations which cooperate in the carriage of goods to Cuba. I would like to point out at this time that in my judgment the major shipping nations are not largely recipients of foreign aid today. They have been in the past. Great Britain, Germany, France, Greece-well, Greece might be an exception to th3 rule but the other nations are not recipients of foreign aid. The other thing that I would like to point out and make completely clear, a statement has been made that Norway, West Germany, and Turkey, I believe, have indicated their cooperation, that they will cease making their ships available to Cuba. Well, this is a gratifying report. However, it in no way helps the situation if Norway, Turkey, and Greece and the other allied nations keep on chartering their ships to Russia. Because if the Russians have a requirement of 100' ships, as an example, for the trade with Cuba, if they charter those hundred ships they will make 100 of their own ships available to Cuba. So the key to the situation is actually the prevention or in some way to institute some form of system wherein our friends and allies will in some way stop chartering ships to Russia. It is not only exclusively for the Cuban trade. Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Approved For Release 2005/05/12 : CIA-RDP65B00383R000100130001-8 Let me spear first about the shipments of Public Law 480 grain financed and paid for by the Government of the United States. In some cases, the Government of the United States even pays for the shipping freights. On American vessels, we carry these grains to India, Pakistan, Turkey, and other countries. Ships which carry this surplus grain are usually required to return to the United States in ballast and without cargo. During the ballast voyage back to the United States, they receive no revenue but have all the `expense of sailing the vessel including the crew cost, fuel, insurance, and so forth. On the other hand, a vessel which trades to Cuba receives revenue for carrying cargo to Cuba : it has no westbound ballasting costs but actually makes :nonev carrying the cargo to Castro. After discharge of its cargo in Cuba, it is in Perfect pposition to move over to a port in the United States either in the Gulf of Mexico or on the east coast and pick up Government-paid-for grain. It thus obtains reve- nues on a two-way voyage basis. Because of the revenue which it receives in the carriage of Government-owned grain on the eastbound voyage, it is able to quote a lower rate to carry the cargo to Cuba. This is a never-ending merry-go-round. You will note it results in the Government of the United States subsidizing the vessels which carry cargo to Cuba. You will note also that it puts these vessels which trade to Cuba at a tremendous competitive advantage over all ships of the United States and of all other nations whose owners do not trade to Cubt, by permitting them to charge lower rates for the Government-aid grain. We must charge our full costs of a round voyage to the gra:ncarry:ing port; ships which go to Cuba need charge only half their coasts to the grain voyage. Under our existing policy in permitting vessel 3 which trade to Cuba to carry Government-owned grain, we are thu_s giving a great advantage to ships which violate our national' policy by trading to Cuba and we are also handicapping I both American and foreign-flag ships which adhere to our Govern- ment's policy by not carrying cargoes to Cuba. The cure for the s anomalous situation is quite simple. The Depart- ment of Agriculture, under existing authority, merely has to provide that no vessel which has carried a cargo to Cuba within the past year -shall be eligible ti, carry Government-sponsored grain shipped pur- suamt to the Public Law 480 program. Other departments such as :All) and GSA would also provide that ships which have traded to. Cuba within the prior 12 months cannot carry their cargoes. In :order to obtain furl effectiveness of these provisions, I would suggest that the Department of Agriculture, AID, and other agencies should provide that no vessel owned by the same company or owner which has it vessel which has traded to Cuba should be permitted to carry Government-financed cargoes for 1 year after their last voyage to Cuba. As I previously mentioned, no oil can be imported into the. United States without firs,, receiving a license from the Department of the anterior. Today, :3ussia uses oil as an economic weapon.. Many foreign-flag tankers have been chartered to carry Russian oil to Cuba as well as to other Communist countries. I would respectfully sug- gest that this committee recommend to the Department: of the Interior that no license be isined for the importation of any oil upon it tanker