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

450.6031/6–754

The Secretary of Commerce (Weeks) to the Special Assistant to the President (Cutler)

secret

[Washington,] June 7, 1954.

• Subject:
• East-West Trade

Dear General Cutler:

In the light of recent discussions in the National Security Council, it seems to me important to bring to your attention a point which I consider has been too lightly passed by without sufficient consideration for all of the ramifications involved.

In discussions to this point we have been considering on the one hand trade with China and on the other hand trade with the Soviet and iron curtain countries as though the two propositions were separate and distinct. The fact of the matter is that trade with China and Russia are one and inseparable and in my judgment should be treated as such in any further consideration of the subject.

We discuss possible deletions from the embargo, quantitative and watch lists with the thought in mind that this opening up of trade with Russia will have no possible effect on our de facto embargo on trade with China.

If we let down the bars and authorize deletions from the three lists cited above, we are to this extent and degree helping build the Soviet industrial war potential and additionally we must understand that to a much greater extent we shall be building first the Chinese industrial potential and later her industrial war potential. Every item on the list of deletions sold to Russia can be transshipped to China by the Trans-Siberian Railroad, or by a much easier route—through the port of Vladivostok.

I cannot emphasize strongly enough my desire for trade and my belief that trade is good. I am equally certain that we can never project our ideology and viewpoint through an iron curtain and that the way to cure Communism is in some manner to show the Communists that some other way of life is better.

However, I am equally certain that to a day by day increasing extent a war machine cannot be in being or function without an efficient industrial machine back of it. Science is making such fantastic progress that this industrial machine has to be continually revised and brought up to date if it is to give the war potential the support it must have.

Our information leads us to believe that for the foreseeable future the Communist countries cannot bring their industrial machine to this necessary point of perfection without materiel and assistance from the free economies which they so despise.

To be specific, it seems to me that we should immediately, in our thinking on this general subject, link China and Russia together and talk on the subject of East-West trade as though the two countries were one. This, I am sure, is the practical, realistic approach. At the present time 75% of China’s total imports, estimated at $1,360,000,000, are received from the Soviet bloc. Since the Russians are not presently able to produce any substantial surplus of any of the items on our present strategic list, it is obvious that any additional quantity of any item which China receives must in the first analysis be imported by Russia under the present East-West trade arrangements. It seems to follow from this conclusion that whatever relaxation there may be in the present level of controls between the Soviet and the Western blocs will not only serve to assist in building up the Soviet potential and the China potential but also serves to make China increasingly dependent upon and subservient to Moscow. What we have then is a situation whereby our actions in respect to controls over trade with the Soviet bloc contribute directly to frustration of the policies which we are trying to implement in respect to China.

This situation is not cited for the purpose of suggesting that we should adopt a China policy on controls parallel with the one which we are developing in respect to trade with the Soviet bloc. It does suggest, however, that greater caution should be exercised in considering any further retreat from our present position in COCOM so long as the present unfriendly relationship exists between China and the Western bloc. It also suggests to me at least the desirability of a review of this aspect of the problem with the U.K. Government at the highest levels since, until this question is resolved in a way which would enlist the wholehearted support of the U.S. public, it would be extremely difficult to resolve the large number of items presently in disagreement with the U.K. Government.

The attached copies of reports from two of the Commerce Department’s technical experts who have just returned from discussions on this subject with the British in Paris are illustrative of the frustrating situation in which we find ourselves.

I believe we may have already agreed, pursuant to the criteria agreed upon in London, to delete from the embargo list items which the Soviet bloc will find very useful, if not in direct military production at least in production providing strong support to their major military build-up. I gave you a list of a number of items which we look at in this light.

In this presentation I have only in mind the security of the United States and our defense position, which, from this point of view, at least, I consider it my duty to bring to your attention.

Respectfully yours,

Sinclair Weeks

[Attachment 1]

Memorandum by the Deputy Director of the Power Equipment Division, Department of Commerce (Hand) to the Deputy to the Assistant Secretary of Commerce for International Affairs (Smith)¹

secret

[Washington,] May 24, 1954.

Report on Tri-Lateral and CoCom Meetings in Paris

The Tri-Lateral and CoCom discussions on Electrical and Power Equipment have been completed. Results could have been much more satisfactory. The purpose of this memorandum is to propose methods whereby procedures can be improved and, it is hoped, with much better results.

The French attended the Tri-Lateral discussions on this equipment but did not take an active part. Later this caused considerable difficulty in the CoCom meetings because they did not follow through with a united front. The British took a very active part in Tri-Lateral meetings but gave only lukewarm endorsement in the CoCom meetings. A solid U.S., British and French front in the CoCom meetings would assure agreements on many items; as it is, the countries with only minor interest in some items are raising major questions without active rebuttal from these three countries.

Time is allotted for both the Tri-Lateral and CoCom meetings on the basis of the number of items in a category. In Power Equipment there are a few minor items and a few major items. As much time is spent on minor items as is spent on major items. For example, more time was spent on cutting electrodes than was spent on turbo-generator sets. The U.S. Delegate should have insisted on more time for the major items but since even he did not understand the importance of power generating equipment it received inadequate time and consequently was a disagreed item.

The U.S. has a strong position in their willingness to send numerous technicians to these meetings. This strength is weakened by inadequate briefing in Paris. More time is required for discussions between the team coordinators and the technicians. In my case the CoCom meetings were unsatisfactory because the team coordinator did not use his technician to best advantage nor did he take an aggressive part in the meetings. Other countries look to the U.S. for active leadership in these problems but unless we act the part, other countries will continue to disagree with us and with each other.

Difficulties in these discussions were caused by different interpretations of the criteria. The British and others insisted on conclusive evidence that there was a shortage of power equipment in the Soviet Bloc. All countries of the world, even the U.S., are short of power equipment yet we were asked to prove that the SovBloc did not have all the generators they needed for fissionable material productions.

The feeling that we were facing opponents rather than teammates persisted through all the meetings which I attended. Concessions were made on some items in an effort to agree on other items but this only brought forth more disagreements.

Essentially all countries, except the U.S., are represented by the same individuals for all categories. This results in some rather unusual situations. Cyclotrons were confused with the diffusion process in atomic energy, turbine propulsion units for ships were confused with diesel propulsion units, and units of large size were completely confused with small insignificant units. This combined with a basic disagreement on the meaning of the criteria puts many items on the disagreed list.

[Attachment 2]

Report Prepared by John F. Skillman of the Department of Commerce

[Washington,] May 25, 1954.

A Report on the Trilateral Discussions Held in Paris May 10 Through May 13

The following paragraphs cover impressions received in preparing for and attending the Trilateral discussions in Paris participated in by representatives of England, France, and the United States, covering the general industrial equipment area of machinery and production equipment. This report does not give the detailed outcome of the discussions of each of the 41 separate items of equipment but rather is intended to cover the general impressions received of the entire East-West trade discussions now going on.

The small staff of the USRO located in the Hotel Perey in Paris are working at high speed under tremendous pressure. The men with whom I dealt, including H. Gardner Ainsworth, Sidney B. Jacques, Mishell George, and Jack Myerson, are sincere in their efforts to carry out the Trilateral conversations successfully and are literally working nights, Saturdays, Sundays, holidays, and almost around the clock in their efforts to meet a very difficult schedule of meetings, one right after the other, covering all the areas of materials and equipment now under discussion. The attributes or criteria laid down in the original top level agreements do, of course, present serious difficulties to those endeavoring to retain embargo controls on important materials and equipment. These criteria give all the benefit to the side of the discussion endeavoring to remove controls. This in itself makes the handling of the negotiations extremely difficult; therefore, I was disturbed by the additional problems our negotiators are faced with, many of which seemed unnecessary.

In the first place, the Trilateral meetings I attended were held in the British Embassy. It would seem to me that the offices of the French Government would be more suitable since the discussions are in Paris, or failing that, some neutral spot. This may seem to be a small point but it must be remembered that in dealing with the British representatives, you are dealing with people who have almost ironclad instructions as to their position on each item and this position can only change or alter after a discussion with London. Meeting in the British Embassy allows any member of the British team to quickly step outside the meeting, contact London, and be back in the meeting in five minutes with his new instructions, which gives him a decided advantage over the U.S. delegation who can only contact Washington by overnight cable.

Secondly, the U.S. permanent delegation, because of the tight schedule of Trilateral conversations, are faced each Monday morning with a new delegation of experts from the United States. In my own case, and I know in the case of some others, we met our U.S. people in the Paris office for the first time exactly thirty minutes before the Trilateral meeting scheduled four blocks away in the British Embassy. This means that the permanent staff must get acquainted with the new group of experts, analyze their abilities at this type of discussion, go over their problem cases to determine if there is an expert present to cover them and if he can properly cover them, and whether he is the kind of expert who can handle himself well in an open discussion or if he had better be used only as an advisor. Coupled with all this, the permanent staff is at the same time trying to get out its cabled report covering the meetings held the preceding week, and the scene thus generated is one of complete harassment and confusion into which the, perhaps inexperienced, U.S. expert finds it very difficult to orient himself until the Trilateral conversations are almost over. It seemed to me that if it is worth sending a team of experts to Paris for these conversations, it is certainly worth sending them two days earlier so that they could arrive perhaps on a Thursday morning and be completely ready, settled and at ease by the time their meetings start the following Monday. It should be remembered that all U.S. experts are not experienced travelers abroad and cannot necessarily speak the French language. To have these people arrive at Orly Airport with no one to meet them, with, in some cases, no message whatever for them at the airport, with no French francs to take care of them over the week end and with no hotel reservation, is to add unnecessarily to the confusion, in my opinion.

I believe the above paragraphs cover the general impressions received from my ten days’ experience in the Trilateral conversations. I would like to emphasize again that, in my opinion, the staff of USRO, including the three or four secretaries available, were a hard-working, sincere, determined group endeavoring to gain all they could in these Trilateral conversations but their work, already complicated by the very difficult attributes set down at a higher level, is made unnecessarily more difficult by the confusion caused as explained above.

One last thought is that I believe the staff of USRO needs stiffening by some assurance that their jobs will continue beyond July 1 or that some arrangement will be made to continue their employment. I seemed to detect an additional nervousness on the part of some because so many controls are being done away with that it would seem their jobs are also on the way out, and while I do not believe that this affected their thinking regarding controls, I do believe it is an additional worry that could be eliminated.

John F. Skillman

1. Marshall Smith.