762A.0221/4–1951
The Chairman of the Allied High Commission for Germany (Kirkpatrick) to the Chancellor of the Federal Republic of Germany (Adenauer)1
I have the honor to inform Your Excellency that, following upon the decision taken by the three Foreign Ministers in September, 1950 to institute a review of the Prohibited and Limited Industries Agreement, my colleagues and I have today signed an Agreement on Industrial Controls. I enclose a copy of this document2 which shall, as from today, replace the Agreement concluded between the three Military Governors in April, 1949.
2. You will observe that the new agreement, which is subject to review at the request of any two of the signatory Governments, and in any event, not later than December 31, 1951, relaxes a number of limitations hitherto imposed on industry in the Federal territory and will facilitate production in Germany of items and materials for common defense by the West.
3. By the terms of the Agreement, limitations and restrictions hitherto in force upon the size and speed or tonnage of merchant ships [Page 1402] built or otherwise acquired by Germany, primary aluminum, synthetic ammonia, chlorine, styrene, and upon machine tools of types listed in annex “B” to the former Agreement are removed. In addition, the High Commission will be willing to authorize the production of crude steel outside the limit of 11.1 million tons per annum where such production will facilitate steel being provided for the common defense effort. The prohibition on the production of synthetic oil and rubber is removed, and restrictions upon the capacity of these and of the ball and roller bearing industries are now modified. Control is retained, but in modified form, over the production of electronic valves.
4. The three Governments do not desire to hamper technological progress or to prevent the modernization of production leading to the reduction of costs and economies in raw materials, power and fuel. Consequently, in those few industries where the limitation of capacity is maintained the High Commission will be prepared to authorize the substitution of more efficient equipment, the rearrangement of machinery and the introduction of new processes or other technical changes even though this may involve a minor increase in the capacity of the factory or the equipment in question.
5. In authorizing the rehabilitation of plants (including the installation of new equipment) and the utilization of new processes for the production of synthetic rubber and synthetic oil the High Commission will, as long as solid fuels are in short supply, grant licenses only to the extent that additional consumption of coal and coke necessary for the production contemplated does not affect the satisfaction of the needs of solid fuel importing countries. Nevertheless, applications outstanding for use of the plants at Bergkamen, Viktor, Scholven and Ruhroel will be granted forthwith.
6. Whilst the necessity for obtaining license to manufacture machine tools listed in schedule “B” of the old Prohibited and Limited Industries Agreement is not maintained, my colleagues and I require that a system of declaration of manufacture by the producer (indicating the intended destination of each machine) and of reporting on the quantities of such machines in Germany shall be put into operation.
7. The coming into force of the Agreement on Industrial Controls will entail certain amendments to High Commission Law 24 and to ordinances which your Government has issued in respect of the various items concerned. It is not intended that the coming into effect of the new Agreement shall await completion of all administrative processes involved in these amendments, and instructions have been issued to the Military Security Board to treat applications from industry in the spirit of the new Agreement pending the issue of the necessary amendments.