Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

460.509/6–554

The Director of Foreign Operations (Stassen) to the President of the Board of Trade in the United Kingdom (Thorneycroft)¹

secret

Washington, June 5, 1954.

I should like to thank you very much for your reply to my previous letter² and for the constructive approach of your response. We have made substantial progress in resolving the problems and I do appreciate the difficulties involved for you as well as for us.

I share your concern about the number of items which remain disagreed in the trilateral discussions in Paris, although we have thus far agreed to a substantial reduction in the existing International List, and have redefined numerous others. On the basis of the trilateral discussions and the current COCOM discussions, we have agreed to a reduction of approximately 200 items from the entire list of 456 items. Of these over 70 have been deleted outright from the embargo list of 265 items. In general, I think it is correct to state that the area of control which has been relinquished either by COCOM or trilateral agreement comprises all of the peripheral area, and a substantial number of items having in our opinion varying degrees of importance from even the most restrictive interpretation of the agreed terms of reference. Not to be lost sight of is the fact that a substantial number of the embargo listings retained have been redefined to severely narrow the coverage, retaining only those elements of direct and almost exclusive military use. In the area of deletions our agreement to delete a number of items has represented major concessions on our part in the face of strong indications of strategic importance. However, I, too, am anxious that there be further effort made to reconcile the different points of view that led to disagreement on some 80 items.

As I have reviewed the course of the negotiations it appears that much of the disagreement arises from the differing interpretations of the criteria which have formed a general basis for this review. First, there is the question of the present and future contributions which these items may make to the military capabilities of the Soviet bloc. You will recall in the trilateral discussions M. Schumann and you and I reached a clear understanding of the term “military capabilities” was to be understood to mean “present and future” capabilities and that the US would make a statement to this effect in the CG. This was done. The UK position on a number of items has appeared to us to be that we need not embargo certain items which are capable of dual use, i.e., civilian or military production, and in which there is no explicit demonstration that the items are predominantly used for military production in the current period regardless of their relation to future military capabilities. Collaterally, there has been a tendency to judge the probable utilization of these items on the Western use patterns rather than on the use patterns of the Soviet bloc.

A closely related assumption is that where an item is deficient in the Soviet bloc and yet conclusive evidence is lacking that the deficiency is so great as to preclude fairly substantial current use for non-military production it follows that the present or future military capability of the Soviet bloc would not be enhanced by shipments from the free world.

I believe I am correct in citing these interpretations as carrying the burden of the line of argument of your negotiators in opposing continued control of the major number of disagreed items.

The US does not agree with this interpretation of the criteria. This interpretation involves the basic considerations which underlie the determination to revise the international controls on a “long-haul” concept. You will recall that this point was the subject of discussion by me with the Prime Minister and other cabinet members and at the tripartite conference. Fundamentally, we interpret the criteria in terms of the following two basic assumptions. The first is that where an item in short supply in the bloc contributes significantly to current Soviet military production even though also utilized for minimum civilian production uses, it should be denied or limited to the Soviet bloc unless the deficiency can reasonably be overcome within a short period of time. Secondly, when an item is basic to the mass production and highly economic production of military items, whether or not now exclusively so used, this item should be denied or limited to the Soviet bloc. This has particular relevance to the equipment and materials essential for the mass production of planes, ships, guided missiles, electronic equipment, etc., and the materials and equipment used in those related industries which in time of mobilization or under war conditions would be predominantly and even exclusively devoted to military production. In essence, certain items highly important to military production and deficient for all uses, military and civilian, in the Soviet bloc, should be denied or limited unless this deficiency can be removed within a reasonably short period of time.

Regardless of the slight alterations in the over-all Soviet production pattern, the Soviet bloc is predominantly a war economy. The continuing pattern of Soviet production is geared to the expansion and broadening of an industrial base to support not only the current level of military forces but to support a major military effort in the future. The US is willing, and has been willing, to concede that a number of items are not of crucial importance in the Soviet military build-up, although they are and will be used in military production as well as civilian. A major portion of the items currently in dispute are those items which, however currently used in the bloc, will make a substantial contribution to the ability of the Soviet bloc to maintain or increase its military capabilities—a contribution out of all proportion to possible benefits which the Western countries might derive from trade in such item.

Consistent with the concepts outlined above, I have directed a complete review of the items now disagreed. I can now give you our position on some of them and will advise further through our delegations as rapidly as possible. To confine myself initially with those specifically mentioned in your letter may I say, first as relates to the metalworking machinery group and the rolling mills, I understand that in a recent COCOM discussion of these items, agreement had not been reached, and alternative proposals advanced informally are currently under discussion by our respective tripartite delegations. May I state that the likelihood is that any new definitions which would substantially reduce the already severely limited control coverage proposed by our delegation would prove unsatisfactory to the US.

As relates to the horizontal borers, planers, and planer-millers which you proposed to delete from control, we feel that they have such strategic significance to the current and future military capabilities of the bloc that we believe they must continue to be controlled. Even in the United States these items are predominantly used in defense production, and we cannot accept the proposition that uncontrolled shipments of these items, in which the Soviet bloc is deficient, bear no important and direct relation to present and future Soviet bloc military capabilities. Under those circumstances, unless there can be some strict and mutually acceptable limitation on the size of these items and the quantities which might be shipped, we could not agree to other than the current embargo status. If you would advise me of the quantitative and size limit you would be willing to propose on these items, I shall instruct our officials to take them under advisement in an effort to resolve this matter.

Although you did not mention presses, I am sure you will recall my concern over this item. The disagreement still centers around the cut-off tonnage. We feel strongly presses of 1,000 tons and over should be embargoed, and that presses between 500 tons and 1,000 tons should be included under quantitative control.

You also referred to copper. Here, again, it is my opinion that copper should remain under embargo. This metal is basic to military production; it is critically deficient in the Soviet bloc, and is being stockpiled; there is substantial evidence of massive Soviet efforts to procure this item illegally. In the time of full mobilization or war, requirements for this item increase to astronomical levels. Moreover, the additional reasons for retaining this item under embargo from a political and public point of view are obvious.

With reference to the problem of shipping, the US has given serious consideration to the COCOM Chairman’s proposal calling for a 120,000-ton global quota with an additional amount of 30,000 tons to be subject to the 3D (quid pro quo) justification. Although reluctant in view of the strategic case to be made for a lower quota of shipping, the US is prepared in general to agree to this compromise proposal as suggested in your letter. There are, however, several important elements of the proposal which must be clarified, and included in the proposal to make this a meaningful control level.

a. There should be advance consultation or notification on each transaction once the 120,000-ton level has been reached.

b. The 150,000-ton absolute quota limit for non-embargo ships would include seagoing tugs, dredges, icebreakers and sales of second-hand ships.

c. Sales of second-hand ships over 20 years old would be counted as half against the quota, provided that major overhauls of Soviet bloc ships would also be counted as half against the quota.

d. There would be exchange of information on repairs to Soviet bloc ships.

The details of these points will shortly be taken up with the UK and French delegations.

One other category in which there seems to be a wide area of disagreement concerns vital petroleum products and related production equipment.

I am of the opinion that these items merit the same degree of control as aviation fuels and related equipment despite the fact that they have a somewhat more general purpose usage. There is a mutual and interdependent relationship between petroleum products and petroleum equipment which would warrant comparable control. Even though it be considered that there is an adequacy of petroleum in the bloc for current requirements, in our view this does not establish a presumption of adequate supplies of petroleum products in extended military operation. I question the advisability of decontrolling items in this field that will add to Soviet bloc military potential.

I am sure you appreciate that my Government regards continued control of these petroleum products and equipment as vital to the security of the free world. This concern is shared by the Congress and public in view of the past experience with Japan prior to Pearl Harbor.

Finally, you propose in your letter that as soon as COCOM has completed its review of all categories, approximately 20 June, those items currently agreed for deletion should be decontrolled. In view of the French position and the current Indo-China tension, I must reserve my position on this proposal. I feel it necessary to await further developments before coming to a firm decision on that matter.

To come back to the items in disagreement, I have noted with appreciation your readiness to discuss the use of quantitative control on a strictly limited number of items. This step on your part will go a long way toward resolving our previous difference of position. I feel, as you know, that this technique of control is essential for certain items. I assure you that we will endeavor to limit our proposals in this area in such a manner as to make minimum use of this concept consistent with demonstrable requirements arising from the nature of the items now proposed for such control and the exigencies of the negotiating situation.

Additionally, I subscribe to your proposal that our officials in Paris continue to review the items now in disagreement on a tripartite basis. We are making a searching review here in Washington and our delegation will receive instructions on all such items as soon as possible. I trust this effort, based upon a mutual understanding that we are relating the control of an item not only to its present, but also its future, significance to the military potential of the Soviet bloc, will do much to reduce the number of disagreed items now outstanding. If the disagreement cannot be reconciled by our delegations in Paris, I would suggest further consultation between us by cable to then determine whether we and M. Schumann should personally meet again.

I am sending a copy of this message to M. Schumann.

1. This letter was transmitted in telegram 6599 to London, June 5.
2. Exchanges of letters between Governor Stassen and Thorneycroft had taken place since Governor Stassen’s visit to London in late March. Each dealt with specific aspects of the negotiations, agreed upon at that time in principle, for the reduction of the International Lists. The letter from Stassen referred to here, dated May 14, dealt with copper, nickel, iron, scrap steel, and shipping controls. (460.509/5–1454) Thorneycroft’s reply of May 28, besides presenting the British viewpoint on these items, pursued the question of limiting shipments of electronics equipment and metalworking machinery, and reaffirmed the reluctant willingness to yield on the issue of “peel-off” or progressive decontrol of restricted categories. (460.509/5–2854)