SUMMARY UNITED STATES POLICY ON JAPANESE EXPORT CONTROLS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00647A000200110007-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 66
• Document Creation Date: December 9, 2016
• Document Release Date: March 24, 2000
• Sequence Number: 7
• Publication Date: December 13, 1951
• Content Type: SUMMARY

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SECRET - SECURITY INF'OR MAT ION
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UNITED STATES POLICY ON JAPANESE EXPORT CONTROLS
I. UNITED STATES POLICY RELATING TO JAPANESE EXPORT CONTROLS.
United States policy provides that the United States should
seek to obtain effective export controls in Japan which will
contribute to the mutual security interests of the free world.
At the same time, United States policy towards Japanese export
controls must generally take into account the following related
policies:
1. It is our policy to assist Japan to become economically
self-supporting and to increase its output of strategic
materials of benefit to the free world.
2, NSC 104/2:
(a) It is United States policy to press for the appli-
cation by the maximum number of friendly countries
of controls which will diminish the war potential
of Communist China;
(b) It is United States policy to take such steps as
are practicable to develop altei^nate sources of
supply of important basic materials required by
the free world and now being obtained from the
Soviet Bloc;
(c) It is United States policy to determine the desira-
bility of diverting to the free world specific
products or services now being offered by the free
world to the Soviet Bloc.
3. The, .Battle A establishes a policy of terminating aid to
countries which knowingly permit the export to the Soviet
Bloc of certain stated categories of strategic commodities.
II. JAPANESE
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(Summary, Cont'd)
II. JAPANESE EXPORT CONTROL POLICY.
.Although it was recognized by the United States Government
in 1949 that increased Japanese trade with China would contribute
importantly to the economic viability of Japan, it was neverthe-
less concluded that exports of strategic goods to China would have
to be restricted in accordance with the mutual security interest
of Japan and the United States. United States policy in respect
to Japanese export controls as established in the latter part of
1949 and early 1950 provided that exports of items of primary
strategic importance were to be denied to the Soviet Bloc includ-
ing Communist China and that exports of items of secondary stra-
tegic importance were to be strictly limited and exported only _-^
when the balance of advantage was clearly in favor of Japan. n
June 25, 1950, immediately following the outbreak of the Korean
hostilities all security goods as well as other materials of a
critical nature were prohibited to Communist areas. These con-
trols were further tightened in December of that year including
the additional restriction that all goods landed in Japan for
transshipment were subject to export licensing. The prohibited
list now includes virtually all commodities but the following:
certain foodstuffs, cotton textiles, raw silk and silk fabrics,
woolen fabrics, bicycles, sewing machines, handpowered agri-
cultural machinery, and paper.
III. ANALYSIS OF JAPANESE TRADE WITH THE SOVIET BLOC.
A. Exports.
Japants exports to the Soviet Bloc, almost all of which
went to Communist China, were valued at $20.4 million in the calen-
dar year 1950 and at 85.5 million for the period January-July 1951.
1950 exports represent about 2.5 percent of total value of exports
and those of the first seven months of 1951 less than one percent
of total exports.
Exports to Communist China in 1950 consisted of a great
variety of manufactured items with two groups, metals and metal
products
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(Summary, Cont'd)
products, and machinery accounting for more than 80 percent of the
total value. Other primary export categories included fibers and
textiles, rubber and manufactures, industrial inorganic chem3,c_als,
pigment paints and varnishes, and scieific and profes,onal in-
struients. It is estimated that during 1950 about half of Japan's
exports to Hong Kong which consisted primarily of rayon filament
and cotton yarn and fabrics were re-exported to Communist China,
As a result of tightening of export controls since December
1950, Japanese exports in 1951 were reduced in amount and changed
in character. Primary exports have consisted of: bicycles, sewing
machines, fishery products, textile products, and dried milk.
Two barter deals providing for the export of cotton goods
in exchange for salt and coking coal have been concluded.
Bo Imports.
Imports into Japan from the Soviet Bloc including Communist
China amounted to $442 million in 1950 and to $19.7 million in the
first seven months of 1951. Trade with Communist China amounted to
X39.5 and X17.2 in the same periods, Imports from these areas con-
stituted 4.6 percent and 1.4 percent of total imports in the same
years respectively.
Major imports from Communist China in 1950 consisted of
soybeans, peanuts, iron ore, coal, ramie, oil cake, and salt. For
the first seven months of 1951, peanuts, soybeans, and oilseeds
accounted for one-third of imports with agricultural products,
coal, iron ore, scrap iron and steel the other important items.
Primary imports from the Eastern ruropean Soviet Bloc comprised
potash fertilizer from Eastern Germany and Poland, and magnesite
from Czechoslovakia. In 1950 the U.S.S.R. supplied X738,000 worth
of coal; however, no imports from the U.S.S.R. were recorded in 1951.
Imports from Hong Kong, a considerable portion of which may have
originated in China, consisted of peanuts, beans, scrap iron and
steel.
Due to present world conditions and restrictions on trade
with Asiatic areas under Communist control, procurement of adequate
supplies
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(Summary, Conti d)
supplies of certain raw materials to meet the requirements of an
expanding economy has become a major problem for Japan. Such
items as iron ore, coking coal, pig iron, salt, soybeans, peanuts,
and fertilizer were obtained from China in large quantities during
the pre-war period., and were on the increase in 1950 although dras-
tically reduced in 1951. It is estimated that Japan's imports of
potash primarily from Eastern Europe could be obtained from other
sources. Foodstuffs could probably be obtained from the United
States without additional costs. Imports of iron ore and coking
coal can be obtained from alternate sources, the United States and
Southeast Asia primarily at somewhat higher costs; however, the
total difference in cost in obtaining these two items with an
allowance for other minor items from other areas would amount to
$70 million in 1951-52. The increased cost might make Japanese
industry somewhat less competitive in world markets. Additional
problems are created by a shortage of shipping space both foreign
and domestic.
C. Short and Long Run Problem of Markets for Japanese Goods.
In the short run, Japan's prospects for expanding its
exports appear good in view of special procurement for military
purposes and the conclusion of trade agreements providing for
high levels of trade. The impact on the Japanese economy of a
complete cessation of Communist China purchases in Japan in the
short run if considered in terms of the volume of trade in 1950
would, 'therefore, appear to be relatively minor. ...rte
Japan's total exports Amay well reach a level in excess of
-billion in 1952 nc ud,.ng ~ x;-350 million in)special de-
fense procurement. The remainder, which would comprise commercial
exports, would mean an expansion of Japanese trade by about 40 per-
cent over the annual rate of Japanese exports for the first six
months of 1951. A very large portion of the expansion of such trade
is expected to be with South and Southeast Asia. Exports to areas
other than Asia in 1952 are estimated at couble the 1950 rate.
Present world conditions combined with the recognized resourceful-
ness of Japanese traders and Japan's industrial capacity justify an
optimistic view, for the near future at least, of Japan's export
prospects. Japan may, however, require United States assistance in
order
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(Summary, Co tfd)
order to obtain sufficient supplies of raw materials required to
reach the above assumed production levels.
D. The Significance to the_ Chinese Domestic
Economy nn War Ef?ort of Trace wit Japan.
Japan,as an industrial nation and by its location and
past economic relations, is of particular importance to China and
China's prospects for development. China requires industrial im-
ports which Japan can furnish more cheaply and more rapidly than
other areas, Moreover, Japan is a potentially large market for
China's exports. Restrictions on Japanese trade with China have
caused an unnatural reliance by the Chinese on imports from the
Soviet Union which may become a potential source of friction be-
tween the two Communist countries. ~.. ms's-w?, -
Sino-Japanese trade during the post-war period has been
negligible in contrast to pre-war trade, due in part to the politi-
cal chaos in China and to the low level of industrial output and
commercial foreign trade of Japan. Ja 's 5O exports of in-
a*,( dustri al products to China comprised 1-e one-fifth of China's
imports of those items which were (important in enabling rehabili-
tation and maintenance of industrial plants and a consequent increase
in the industrial output of the Chinese. China must depend on the
Soviet Union to meet its deficiences of military equipment. Re-
sources which China contributes to its wawa tial are such non-
militar items as food, clothing, trap or, ancT similar goods and
services.
The Chinese Government now exerts strong controls over the
terms, direction and composition of China's foreign trade and it is
clear that the terms of Sino-Japanese trade would be established by
government policy decisions and not by private traders. Barter
trade offers will probably be made by both countries to the extent
that controls permit.
It is obvious that exchanges of goods between China and Japan
would provide benefits to each country. Although the Chinese Com-
munists will undoubtedly set the terms at which China will trade,
in the face of pressing imports needs and the problem of export
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(Summary, ContId)
markets, China may be more concerned with expanding the volume
of trade than restricting it to obtain better terms.
IV. JAPANESE PRODUCTION OF STRATEGIC MATERIALS.
Japan's industries have sufficient capacity to make a signi-
ficant contribution to the strategic materials position of the
free world; however, Japan's contribution is heavily dependent
upon the importation of raw materials, The most important of the
materials which Japan can produce are: steel, steel products,
machinery (electrical, communications, transportation), sulphur,
altuminum, refined copper, caustic soda, soda ash, drugs and phar-
maceuticals, gasoline and lubricating oil. Yost of these items
are in global short supply a,t the present time. Japan must main-
tain a high level of exports of manufactured goods in order to
obtain foreign exchange for required food and raw materials. (See
attachment for discussion of these items.)
V. BALANCE OF PAYT/ENTS PROSPECTS.
It is estimated that Japan will enjoy a relatively favorable
balance of payments position during the next two years. Deficits
in commodity trade with the dollar area can probably be covered
by earnings from special exports and expenditures of United States
military personnel stationed in Japan. Loss of China trade should
not have a crucial effect on the short-run balance of payments
position. The long run problem is a more serious one and will
depend upon the competitiveness of Japanese exports and the general
attitude of countries trading with Japan. To the degree that pro-
curement of raw materials is not shifted successfully to non-
Communist sources, Japan will feel acutely the need for trade with
China. The extent to which such trade must be diverted to dollar
sources will determine the stringency of Japan"_s..balance.of pay-
ments position.
VI. JAPANESE ATTITUDES ON CONTROL OVER TRADE
WITH THE SOVIET BLOC.
The Japanese tend to view the question of trade with the Soviet
Bloc in terms of Communist China, rather than the Bloc as a whole.
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SECRET - SECURITY IP.TFORBTATIfN
(Summary, Cont'd)
The Japanese would, of course, prefer as few testrictions as possi-
ble in the field of foreign trade; they realize, however, that in
view of the threat posed to their national security by Communist
aggression restrictions are ravoidable. There is evidence that
Japanese iapvernment official wish?ko see a substantial resumption
Japanese willingness to impose controls after the Peace Treaty
will be influenced by the similarity of those controls to those ap-
plied by other countries, the status of the Korean hostilities,'"and
count the needs of Japan.
v v+a v
The Japanese have been generally willing to join in collective 4~0
measures to check Communist aggression,an support for controls in
line with those of other countries could be obtained though stricter
controls would present a greater problem. If the Kor n hostilities
continue, there should be no difficulty in view_ f overriding 'secur-
ity considerations in continuing the present controls. If hostili-
t'P nd, however, problems might arise in retaining controls over
trade with Communist China especially if those of otr countries
If alternate sources and markets are successfully developed
in other areas, especially in Asia, economic pressures for re-
sumption of China trade would be reduced. An export control pro-
gram by itself would not seriously threaten the stability of the
Japanese Government; however, if it were considered to represent
a subordination of Japanese interests to foreign control, it would
place the government in a difficult position and might lead to in-
creased pressures in Japan to demand that United States economic
and financial aid make up the loss sustained.
VII. ADMINISTRATION OF EXPORT CONTROLS.
Licenses are required for the export of all commodities in-
cluded in revised Japanese Government export list (copy attached).
All export license applications to _99AP indicating a Com-
munist destination are automatical y eniequestionable cases,
guarantees against transshipment are sought in the form of end-use
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SECRETTRITY IN, 'ORMATIOAN
Summary, Conttd)
checks, written statements, supervision by customs, amplified
bills of lading, and essential supplies certificates when goods
are destined for-Hong Kong. Operational supervision of foreign
trade is the responsibility of the Japanese Customs Service,
Smuggling detection activities are conducted by the Japanese
Maritime Safety Bureau. Penalties are provided in Japanese law
for violations of export control regulations. Under the sur-
veiUan:e of SCAP, barter deals are concluded with the Chinese
involving the exchange of(cotton textiles for essential raw
materials,
A. Improvsments in Japanese Export Control Mechanisms.
Although the present system is relatively effective,
there are certain features of the control system which need atten-
tion.
In addition to'instruction in the techniques and facili-
ties used in the administration of security export controls in the
United States, the Japanese could also benefit from United States
tions as handling hardship cases which may
h
opera
experience in suc
oliticalreconomic gr uj'3 The
with
li
d d
p
ng
ea
arise an
establishment of adequate inzTestigative and intelligence Thcilities
ld also
h
,
ou
in Japan and abroad is of utmost importance. Attention s
be given to centralization of customs supervision and adequate pen-
alties for violation of. Japanese export regulations. It is import-
ant, too, that the Japanese e' _ an adequate system for com-
piling and reporting trade statistics on security items.
B. Financial Controls.
No restrictions have been placed in Japan on Chinese -
munist assets ,and assets of other Soviet Bloc countries Which are not
believed ta be substantial, To extent that foreign currency
escrow accounts have dollar counterparts they are subject to the
Foreign Assets control of the United States Treasury. Assuming
adequate export controls in Japan, it would appear that the im-
position of blocking controls on Chinese and North Korean assets
would have little if any effect on Japanese trade with Communist
China ?
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(Summary, Cont'd)
China and forth Korea. Financial measures might be useful, how-
ever, in preventing undesirable triangular transactions involving
strategic goods which do not enter Japan.
VIII., CONCLUSION:
The primary objective of the United States in Japan should
be to secure an undertaking from the Japanese Government that it
will adopt security trade control policies which will be fully
consistent with and will contribute to the security interests of
the free world, Japan's security control problems largely affect
trade with Communist China whereas those of the other primary
countries imposing controls are directed at Eastern Europe.
Japan+s controls over trade with China are among the most
re o hose countries which impose such controls, in spite of
the fact that Japan more dependent economically on Sino-
Japanese trade than any other area with the possible exception of
Hong Kong. However valid this fact may be as a reason for re-
laxing present controls when China is not engaged in aggression,
it ?-nvt serve as a basis for weakening Japanese controls
fading nations participating in the Co-
"
urity export controls,
IX. RECOM NDATIONS:
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It appears, on the basis of the analysis in section III, that
the maintenance of the present strict controls by Japan need not be
harmful to the Japanese economy, at least in the short run, and
should have an important effect on shifting China's import require-
ments to less economic sources of supply. Although Japan faces
some problems of alternate sources for materials such as coking
coal and iron ore, and alternate markets for items normally sold in
China, neither of these problems seems of sufficient severity to
warrant a significant relaxation of controls over trade with-China.
-In the e ent that a s
ties dev lops and ass
not be inconsistent
tisfacto y settlemen
~
ing no
similar agg
ssion elsew ere, --It' might
ty interests to re pres-
so as to pe,-mit increa d trade with
ationship 6f such con- 'cols to those
ant Ja ne'se export abntrols
China eeping in mind the r
exez c ed by other rt j or t
ordi A ting committee on s
Vew
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(Summary, Cont'd)
IX. R CoN AE DA 'IONS :
It is recommended:
C
1. That United States influence be exerted to the
fullest degree necessary to maintain Japanese export controls
at approximately the present levels as long as aggression in
Korea continues and until a reasonable basis for an armistice
is agreed on and there is reason to believe that it will be
maintained.
2. ,That United States influence be exerted tp the fullest
degree necessary to insure that after the Korean hostilities
are ended and an armistice is effective Japanese export con-
trols are maintained at a level identical with or as closely
comparable as possible to the strictest controls maintained
by other major nations of the world against the Soviet Bloc
including China.
3. That the United States assist Japan in the development
of adequate export control procedures and in the establishment
of an export licensing system sufficiently extensive to permit
full control of Japanese trade with the Soviet Bloc.
4, That a United States survey team of security trade
control specialists be sent to Japan to explain, in cooper-
ation with SCAP, the purposes and general strategy of United
States and international export control policies and pro-
cedures and to carry out the recommendations in 3 above.
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SECRET - SECURITY INFORMATION
SECTION I
UNITED STATES POLICY RELEVANT TO TIC
PROBLEM OF JAP~_NESE EXPORT COrITROLS.
It is United States policy to seek to obtain in Japan ef-
fective export controls which will contribute to the mutual
security interests of the free world. 8 paragraph in the perti-
nent policy paper states that the United States with respect to
Communist China should continue economic restrictions --- and
intensify efforts to persuade other nations to adopt similar
restrictions as related to developments in Korea.
The same policy recognizes the need for solidarity with
our principal allies and for cooperation with other friendly
nations in the security control effort. It 'further states that
the United States should assist Japan to become economically self-
supporting and to produce goods and services important to the
United States and to the economic stability of the non-Communist
area of Asia.
NSC Document 104/2, "United States Policies and Programs in
the Economic Field which may affect the Vt'ar Potential of the Soviet
Bloc", provides that The United States, in view of the Chinese Com-
munist aggression in Korea, should press for the application of such
international control measures as will be effective in diminishing
the Chinese Communist potential for military aggression. Its ef-
forts through the United Nations and other channels should be
directed to seeking, on a cooperative basis, the application by the
maximum number of friendly countries of such controls for this pur-
pose as the United States considers would be in the common security
interest".
United States policy as stated in NSC 91/1 and revised in NSC
104/2 paragraph 6, provides a basis for withholding from Japan
United S:;ates products of primary or secondary strategic import-
ance if similar products were being exported by Japan to the Bloc.
NSC 104/2
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(Section I, Cont'd)
S E C F E T - SECURITY INFORMATION
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NSC 104/2 also states that this country should press for
additional measures in the field of international security con-
trols, including more effective controls over transshipments and
shipping with the purpose of prohibiting the carriage of embargoed
goods.
The Battle Act (Public Law 213) is the most recent expression
of United States policy in respect to the shipment of strategic
materials to the Soviet Bloc, This legislation states that it is
the policy of the United States to embargo certain categories of
goods to prevent their export to the Soviet Bloc and further that
United States aid should be withheld from countries exporting such
goods. It is clearly stated that the Act shall be administered in
such a way as to bring about the fullest support for any resolution
of the General Assembly of the United Nations, supported by the
United States, to prevent the shipment of certain commodities to
areas under the control of governments engaged in hostilities in
defiance of the United Nations.
United States policy recognizes that undue reliance on trade
with the Soviet Bloc may constitute a security' risk and accordingly
states that the United States with the aid of friendly foreign coun-
tries should seek to develop alternative sources of supply of im-
portant basic materials now obtained from the Bloc. It underlines
the importance of strengthening the bargaining position of countries
which now rely on the Bloc for essential materials. The problem of
alternative markets for goods which are being or would otherwise be
sold to the Soviet Bloc is also noted in United States security
control policy and policy regarding the Far East.
The United States is interested in attaining in Japan maximum
output of strategic materials for the benefit this will bring to
Japan and the free world. This policy, too, has a bearing on the
problem discussed herein.
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ECRET SECURITY INFORMATION
SECTION VIII
COTTCLUSION:
The primary objective of the United States in the security
controls field in Japan should be to secure an undertaking from
the Japanese Government that it will adopt security trade control
policies which will be fully consistent with and will contribute
to the security interests of the free world., So long as the
Soviet Bloc countries, and particularly those which are engaged
in aggression, threaten the security of the free world, Japan
should cooperate in denying the Soviet Bloc access to goods and
services which would contribute significantly to the war potential
of the Bloc.
It must be recognized, however, that the Japanese security
control problem differs from that which confronts the major nations
of the world who have already adopted controls affecting trade with
the Bloc. Western Furopean trade controls---and they are the princi-
pal controls affecting trade with the Soviet Bloc--were designed
primarily to deal with the question of trade with the European mem-
bers of the Moo. It was only after the aggression in Korea that
those controls were extended to China. In some cases the controls
were increased to a level above that applying in Europe.
Japan's trade, on the other hand, is normally not large with
the European members of the Bloc. Its trade control problem via-a-
vis the Soviet Bloc is primarily the problem of controls over trade
with China.
The United States has the strictest controls over trade with
Communist China since it maintains an export embargo and has re-
duced imports very substantially. Japan's controls established by
SCAP are almost equal to those of the United States in severity and
prevent the export to China of all but a few products such as tex-
tiles, bicycles, sewing machines, and a few other consumers' goods.
Although Japan's trade in textiles has recently been the cause
of some dissatisfaction in Hong Kong, whose textile trade with China
has been substantially curtailed, Japan's over-all controls are
considered
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(Section VIII, Conttd)
considered more stringent than those of Hong Kong and the United
Kingdom although tie latter have considerably increased the strin-
gencr of their con rois in recent months.
Th3 United Kingdom, including Hong Kong, embargoes to Com-
munist China all items on International Lists I, and II (exception
tin plate), thirty items on List III, and sixteen other items
which the United Kingdom normally regards as ha ring a predominantly
civilian use but which would be diverted to military purposes by a
country engaged in military operations. In the implementation of
the United Kingdom embargo list, the United Kingdom exercises dis-
cretion over items which it is felt in certain circumstances would
not contribute to Chinese military strength. Under this control
list, Hong Kong may therefore under special circumstances export
certain of the listed goods and also other lesser and non-strategic
items in such categories as chemicals and pharmaceuticals, non-
metallic minerals, machinery, apparatus and appliances, dyeing,
tanning and colouring substances, fertilizers, and textile fabrics.
In contrast, Japan's export control list prohibits the export of
all items in such categories, except those for household use, and
cotton textiles, and limits Japan's exports to the small number of
items mentioned previously.
The countries of Western Europe in the Coordinating Committee,
other than the United Kingdom, have been generally controlling
trade with Communist China on the same basis as trade with other
Soviet Bloc countries. Thus they embargo items on International
List I, quantitatively control items on I/L II, and report on ship-
mente, of I/L III. In actual practice, however, certain of the
,COCOM countries were more restrictive than required by COCOM agree-
ment. The United Kingdom has recently proposed that all COCOM
countries agree to increase their controls to the level of those of
the United Kingdom and its colonies, and it is believed that most
countries will accept the U.K. list with the exception of certain
List III items.
ttile it is sometimes suggested that Japan should not be ex-
pected to maintain stricter controls against the Soviet Bloc than
those maintained by other major industrial and trading countries,
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(Section VIII, Cont'd)
it should be noted that Japan's trade position in relation to
the European members of the Bloc is more akin to that of the
United States than that of Western Europe and its controls could
similarly be more severe than those of Western Europe without
having a significant economic effect on Japan.
In the case of China, however, a comparison of the Japanese
position with that of other countries trading with China, indi-
cates that Japan's claim to the economic necessity of its trade
with China equals or exceeds that of any other supplier with the
possible exception of Hong Kong. However valid this fact may be
as a reason for relaxing present controls when China is not en-
gaged in aggression, it should not serve as a basis for weakening
Japan' s controls now or after the effective date of the Peace
Treaty if China's aggression is continuing or the worth of a truce
is still open to question at that time. Japan's controls should
serve rather to re-enforce the argument that the controls of other
countries should be further tightened to limit China's war poten-
tial. If the present "Level of Japanese controls were to be sig-
nificantly reduced prior to the end of the aggression in Korea, it
is doubtful that Hong Kong's controls could be long maintained on
any commodities in respect to which Japan' s controls were the more
lenient. Hong Kong's present inquiry with respect to Japanese ex-
ports of cotton textiles is illustrative of this point. As a
matter of fact, it will probably be difficult to maintain differ-
ent levels of controls in Japan or Hong Kong given the similarity
of their situations in regard to trade with China.
It appears on the basis of the analysis in section 3 that the
maintenance of the present strict controls by Japan need not be
harmful to the Japanese economy, at least in the short run. The
military procurement program in Japan in support of the Korean war
should provide an adequate offset to any economic loss which may be
attributable to the limitations on trade with China. There remain
some problems of alternative sources for materials such as coking
coal and iron ore normally received from the Asian mainland and of
alternative markets for products normally sold in China although
the latter problem may be solved to some extent by the procurement
SECRET - SECURITY INFORITATION
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
SFCRET - S 'CTJ1 TTY IATFOnYATICN
Section VIII, Conttd)
programs contemplated for Japan. In the short run neither the
supply nor market problem seems of sufficient severity to war-
rant a significant relaxation of controls over trade with China
which would permit the acquisition by China of materials use-
ful for supporting its efforts in Korea.
In the event that a "cease fire" is arranged in Korea and
its maintenance seems sufficiently assured to warrant some con-
fidence on this score, and. assuming no similar aggression else-
where, it would not be inconsistent with the mutual security
interests to relax the present Japanese export controls so as to
permit increased trade with Communist China. Nbat relationship
controls over trade with China should bear to those maintained
over trade with the Soviet Bloc in ,,ur.ope would need to be care-
fully considered. Major differences in these controls in respect
to highly strategic materials would obviously permit their frus-
tration by trarsshipmcnt through the Soviet Bloc country in
respect to which the more lenient controls were operative. On
the other hand, recognizing that the Chinese economy is much less
industrialized than that of the European members of the Soviet
Bloc, it is clear that a policy which limits the war potential of
China would warrant the withholding of material mach less stra-
tegic in nature than would be the case in respect to the European
members of the Bloc.
While the problem of the desirability of maintaining a dif-
ferent control list via-a-vis trade with China would need to be
carefully considered by the several nations interested in that
trade, it is probable that as a minimum it should affect the
items which are embargoed and limited quantitatively in the trade
with the Soviet Bloc in F,urope and, in addition, a further list
for embargo or quantitative control until such time as the coun-
tries of the free world can be assured that Communist China will
maintain peaceful relations with them.
SECRFf - SECURITY INFOR?"ATICN
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
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Approved or R lease 2000/08/23 : CIA-RDP62-00647 00020 1 0007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Table 2. - Japan's Trade with Communist China,
1950 and Monthly 1951
din thouspds of dollars)
Year and Month
Exports
Imports
1950
19,643
39,542
1951
January
371
1,162
February
984
2,899
March
1,209
5,486
April
914
2,365
May
1,582
9
June
1'2
-
jul-V
481
043
Total January-July
5, 541
17,o85
I/ Monthly data here are revised figures, which causes
total to vary slightly from that shown in Tables 1 and 4.
Source: Official Japanese trade data as reported by SOAP.
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Tabl e ~ Japan's Export Trade with Communist China 1950
Commodity Group and Subgroup
Quantity Value
(metric.tons) (1,000 dollars)
Foot and Beverages
Fibers and Textiles
20
1,605
$ 4
1,157
-
Cotton and cotton goods
Cocoon, silk and silk goods
Artificial fibers and products
63
2
234
17
0
77
402
Wool and woolen goods
& 2
Hard and bast fiber mfrs.
Textiles and products, n.e.c.
Wood and Paper
1,226 355
80 140
124 58
Wood manufactures
Paper for writing and printing
Other paper
Paper products
6
118
15
4C
Animal and Vegetable Products, n.e.c.
Furs, hides and leather
Rubber and rubber manufactures
Animal and vegetable products n.e.c.
264
2
262
24
303
*
Oils, Fats and Waxes
16
4
Chemicals
l
2
598
Pigments paints and varnishes
148
172
Drugs and pharmaceuticals
7
66
Industrial inorganic chemicals
945
2
Industrial organic chemicals
72
112
Chemical specialities and misc.
items
49
11
Non-Metallic Minerals
19_~
65
Clay, clay products and pottery
50
2
Glas8 and glass products
1
4
Coal and related fuels
62
24
Abrasives
74
33
Other non-metallic minerals
6
2
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Table 3. (cont'd.) -2-
Quantity
Value
Commodity Group and Subgroup (
000 d
ll
)
t
) (1
t
i
o
ars
,
me
c
ons
r
Metals and Metal Products 1193830
$14,759
Iron and steel mill products 118,844
14,271
Non-ferrous metals 16
4
Non-ferrous alloys 22
12
Metal manufactures, iron and steel 404
83
Metal manufactures, non-ferrous 4
5
Metal manufactures, n, e. c. 539
377
Metal consumer goods, n.e.c. 2
5
Machinery and Mechanical Appliances 3,487
2,348
Electrical machinery and com-
munications machinery 2,329
1,408
Boilers, engines, turbines & parts 3
7
-T
ti
t
hi
d
ranspor
a
on mac
nery an
appliances and parts -
366
167
Textile machinery, sewing machines
and parts
302
390
Other industrial machinery and parts
180
154
Office appliances and printing
equipment and parts
27
45
Civil engineering construction
and mining machinery, appliances
and parts
127
82
Miscellaneous machinery and parts
152
94
Miscellaneous Products
104
Scientific and professional
instruments
80
291
Photographic and projection goods
1
5
Plastics, vulcanized fiber, cello-
phane, etc., and related
products, n. e. c.
19
16
Pictures, printed matter and
related items
Accessories
-
-
Miscellaneous
4
11
TOTAL
x1880
19 - .643
Figures may not add to totals because of rounding.
Less than half the unit
/Mainland China including Manchuria m d Dairen
Source; Official trade data, as reported by SCAP. Tabulation
was prepared by the Department of Commerce, Office of
International Trade, Far Epstern Division.
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Table 4. - Japanese Exports to Communist China 1/
January-July 1951 by Commodity
Value (in dollars
1971
Group and Commodity Jan.
Total exports 5,540,021
Food
Milk and cream, dried X114,81
1
Crustacea and mollusos fresh, chilled,
frozen, salted, dried? 33,090
Fresh and dry vegetables, roots and
tubers, not including artificially dehydrated 40)066
Seaweed, laver in retail containers, dried 175,245
Beverages and. tobacco
Crude materials, inedible except fuel
Mineral fuels, lubricants and related materials
Animal and vegetable oils and fats
Chemicals
Manufactured goods classified chiefly by material 1.790.492
Bicycle tires, pneumatic 11 920
Manufactures of soft rubber 19510
Compressed fiber plates 1,532
Building board of paper or of pulp, not
impregnated 1,054
Paper and paperboard, coated, impregnated,
vulcanized, etc. 5,324
Cigarette paper 44,379
Blotting paper and filter paper 1,718
Paper and paperboard, n.e.s. 10,829
Articles of pulp, of paper and of paperboa.rd,n.e.s. 10,276
Cotton yarn and thread 97,052
Rayon filament yarn 797,101
Cotton fabrics 624,492
Silk fabrics 7,603
Rubberized and other impregnated fabrics and
felts, except linoleums 628
Made up articles of textile materials, n.e.s. 5,138
Bricks, tt;Iles, pipes of clay construction 18,126
Imitation pearl necklaces 110
Household utensils of iron and steel 479
Table and kitchen knives, forks and spoons, of
base metals including plated 249
Cutlery n.e.~. 962
Manufactures of metal, n. e. s. 8
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Table 4. Continued -2-
1951
Group and Commodity
Jan_, -July
Machinery and transport equipment
I
t
3,,340 116
n
ernal combustion, diesel and semi-diesel
engines, other than aircraft engines
19
812
Office machines including typewriters
,
47,684
Sewing machines, industrial and household
288
180
Machine parts and accessories, except electrical
,
6
898
Electrical machinery, apparatus and
appliances, noes.
B
,
285
17
icycles, tricycles and parts
M
,
2,959,460
achines and appliances, other than electrical
672
Printing and bookbinding machinery
125
Miscellaneous manufactured articles
46
Measuring, controlling and scientific instruments
P
1 367
hoto-printing paper, sensitized
2,670
Office supplies (not paper), n.e.s.
41,973
Miscellaneous transactions and commodities, n.e.s. 188
Live animals (not for food), n.e.s. 189
I/ Mainland China including Manchuria and Dairen.
Source: Official Japanese trade date, as reported by SCAPF
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 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
S CRET SECURITY INFORMLTION
Table 5. - Japanese Export Trade by Area and and by Commodities
for 1950 and 19a (first six months
Area
11)50
1951 (6 mo.)
(in milli
dollars)?n
1950
1951 (6 mo.)
ecenta~
Cofrtotal e
Asia
$380
$364.0
46.3
55.0
Europe
96
58.8
11.7
.9
North America
210
107.6
25.6
16.3
South America
31
44.5
3.8
6.7
Africa
73
55.5
8.9
8.4
Australia & Oceania
_0
31.4
3.7
4.
Total
$820
$661.8
100.0
100.0
Commodity Groups
Food and Beverages
$ 54
n.a.
6.7
n.a.
Fibers and Textiles
399
n.e.
48.6
no ca .
Wood and Paper
17
n.a.
2.1
n,a.
Animals and Vegetable
Products
12
n.a.
1.4
n.a.
Oils Fats and Waxes
8
n.e.
1.0
non.,
Chemicals
16
n.a.
2.0
n.a.
Non-metallic Minerals
39
n.a.
4.8
n.a.
Metals and metal
Products
159
n.a.
19.4
n.a.
Machinery
71
n.a.
8.5
n.a.
Miscellaneous
45
n.a.
n.a.
Total
$820
n.a.
_
100.0
n.a.
SECRET SECURITY I T70MIr`:TION
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Table 6. -
Japanese Imports from Communist China
January-July 1951 by Commodity
in dollars)
Group and Commodity
Total imports
Food
Meat and meat preparations
Dairy products, eggs and honey
Rice
Vermi cells
Fruits and vegetables (principally dried
green beans)
Sugar and sugar prep-.rations
Cocoa powder
Tea
Spices (cloves and cinnamon cassia)
Beverages and tobacco
Crude materials, inedible except fuel
Hides skins and fur skins, undressed
Peanuts 2/
Soyabeans 2/
Linseed (flaxseed)
Oilseeds, oil-nuts and oil kernels, n.e.s.
Crude rubber, including synthetic and
reclaimed
Silk waste
Silk, raw
Sheep7s and Lembts wocl
Fine animal hair
Horsehair and other coarse hair
Wool shoddy
Waste of wool and other animal hair
Cotton mill waste
Cotton, carc'ed or combed
Ramie a.nd ramie; tow and waste
Vegetable textile fibers, n.e.s. and waste
of sticn"fibers
Waste materials from textile fabrics,
including rags
Bone
Clay
Feldspar
Graphite
1951
Jan.-July
17,211,124
28328:993
119
7,134
936,616
40
151,949
1,168,688
189
4,222
60,036
12 32329
_8&629
2,702,108
1,274,462
188,511
1,273,726
10,108
320,115
118,482
87,3393
3925d94
5,200
2,673
307,388
5,769
1,943,936
20,254
31,603
1,007
4,625
170,357
9,998
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
-2-
Table 6.(continued)
Group and Commodity
Jan.-July
Crude materials, inedible, except fuel (cont'd.)
Other non-metallic minerals, crude, n.e.s. 15,150
Iron ore
Iron and steel scrap
Bauxite (-1iuminum ore) and concentrates
Bones, ivory., ho:cns, hoofs, claws and
470,118
448,181
47,336
sim-13 ar products 529292
Materi,a.s o',_ an1mal origin, n.e.s. 595?42
Vegetab1. 1 ;~,;.erria'Is for plaiting 309394
Plants C,11,1 parts of plants for use in
dyeing ana tanning, whether ground or net 298,226
Natural gums, esins and balsam 40,734
Plan;,s, seeds.; flowers and parts of plants,
n. e. s. , mainly for use in medicines or
perfumery 1019834
Seeds for planting 463
Lacquer, crude 998,213
Mineral fuels, lubricants and related materials 234,417
Coking coal 234,437
Animal and vegetable oils (not essential oils),
fats, greases and derivatives 1.X71 466
Castor oil 8 ,790
Tung oil 1,153,042
Oils from seeds, nuts and i rnels, n.e.s, 132,634
Chemical elements and compounds 51.909
Prepared paints, enemels, lacquers, etc. 2 , 3
Essential vegetable oils 18,370
Animal glue 10,000
Manufactured goods classified chiefly by material 8a,22
Envelopes, paper in boxes, packets, etc. 1
Albums and scrap books 181
Cellophane manufactures, n.c.s. 1
Silk fabrics 188
Fabrics, n, s. (including fabrics mn.de of
coarse hair and of ppper yarn) 3,000
Embroidery., in the piece, in strips, cr in
motifs 7
Hat bodies, n?eus. 1,760
Made up curtains, draperies, and made-up house-
hold articles of textile materials, n. e. s. 4,368
Made up Erticles of textile materials, n,e.s. 1,838
Carpets, carpeting, floor `rugs m,--,ts ^nd
matting of wool and fine hair 4,903
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
-3-
Table 6. (continued)
Group and Commodity
Jan. -July
Manufactured goods classified chiefly by material
(cont'd.)
Rush mats 3J
267,797
Nickel and nickel alloy, wrought
60,152
Tin and tin alloys, (including tin solder)
unwrought
8,997
Ferro-mailganesn
5,019
Machinery ind t:- :,nsport equipment
L iscellaneous manufactured articles
_.28.221
Clothing
7,020
Footwear, wholly or mainly of leather
2,400
Articles of bnsketwn..re or of ~sjickerwork, n.e.s.
19,724
Office supplies (not paper), n.e.s.
41
Cloissone, n.e.s.
1,032
Miscellaneous tr .nsacti ons and commodities -
Mainland China including Manchuria and Dairen
/ Although included under "crude r.ater3.als, inedible", these
products are used for food purposes in Japan.
,,/ Although listed under "manufactured goods", believed to be
mat rush, a raw material.
Source: Official Japanese trade deta, as reported by SCAP.
Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200.110007-2
SECRET SFCURITY INFORMATION
Japanese Prewar Imports of Selected Commodities,
Total and from China
(Average 1933-37)
Total Imports
Imports from China
Commodity
(Metric
tons)
(Percent
of total)
Coal
2/4,621,439
2/3,261,644
Iron ore
2,982,570
979,064
33
Pig iron
31931,821
3/379,750
41
Magnesite
146,531
5/146,127
99
Salt
1,297,727
555,981
43
Ramie fiber
12,222
12,038
98
Soybeans
721,069
532,033
74
Peanuts
11,778
11,677
99
Oilcake
551,478
477,640
87
Includes Manchuria and Kwangtung.
Principally coking coal but includes other coal since coking
coal was not differentiated in prewar trade statistics.
Average 1933-36.
Includes dolomite since prewar trade statistics group dolomite
and magnesite under one heading.
Imports from Manchuria averaged 71,636 metric tons, which was
principally magnesite, while the balance of imports from Kwangtung is
believed to have included a greater proportion of dolomite.
Sources Based upon official Japanese trade data.
SECRET SECURITY INFORT~ATION
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 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
Approved For
Release 2000/08/23 : CIA-RDP62-006
C+
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110007-2
 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110007-2
SECRET SECURITY INFORMJTIOAT
Table 9. -- JAPAN'S OUTPUT OF STRATEGIC MATERIALS 1952 and 1953
Commodity
Production Civilians Surplus for
thousands of metric tons Requirements Defense
1952 1953 1952 1953 1952 1953
Steel (crude) 7,6000.0 9,000,0
Sulfur
Refined copper
Cement
Caustic soda*
Soda ash*
Petroleum products*
(gasoline, kerosene
and lubricating oil)
65.0 103.8
180.0 225.0
120.0 130.0
6,800.0 7,000.0
400.0 450.0
575 640.0
(in million bbls.)
4,400.0 4,700.0 3,200.0 4,300.0
35.0 to 40.0 25.0 63.8
to to
30.0 68.8
160.0 180.0 20.0 45.0
70.0 80.0 50.0 50.0
5,800.0 6,000.0 1,000.0 1,900.0
350.0 400.0 50.0 50.0
570.0 640.0
Japans position with rospodt to these commodities is presented here only
as possibilities not necessarily as expectations likely to be realized.
SECRET SFCTTRITY T_NFORPATION
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 Approved For Release 2000/08/23 : CIA-RDP62-00647A000200110&7-2
S E C R E T- SECURITY INFORMATION
SECTION II
PRESENT JAPANESE EXPORT CONTROL POLICY.
Development of Japanese Export Controls. When the United
States Government assumed the financial and administrative re-
sponsibilities for a relief and economic recovery program in
Japan immediately after World Tar II, it was recognized by SCAP
and the interested agencies in Washington that trade between China,
then non-Communist,. and Japan was an important factor in the at-
tainment, by Japan, of a viable economy with a reasonably adequate
standard of living, By 1949, however, when Japan was, for the first
time since the end of the war, in a position to export goods in any
significant quantity, the Communists had gained control of the
Chinese mainland, and it was clear that, in the interest of security,
strategic goods should not be permitted to flow to that area. Recon-
ciling these conflicting considerations, the United States' policy
with respect to this trade, as set forth in an exchange of telegrams
between SOAP and the interested Washington agencies in December 1949
and January 1950, provided that exports of primary strategic items
(then called 1-A) to the Soviet Bloc (including China) were to be
prohibited and shipments of secondary strategic commodities (then
called 1-B~ to these areas were to be screened and strictly limited.
Other goods were to be exported freely to China and other Communist
areas.
On June 25, 1950, immediately following the outbreak of the
Korean war, exports to Communist China from Japan of all goode of a
critical and strategic nature were prohibited. All 1-A items were
already being denied Communist China, and, this action expanded the
embargo to include all 1-B items, The ban was not made retroactive,
and therefore some shipments of 1-B items were made after that time
under licenses validated prior to June 25. $hipments of 1-A items
to Hong Kong were prohibited (as had been.the case previously), and
exports of 1-B items were limited to goods needed for consumption
within Hong Kong. Consumer goods and other non-strategic items con-
tinued to flow freely to China and Hong Kong, and such exports en-
abled Japan to procure a moderate quantity of essential foods and
industrial raw materials from China, thus tending to reduce Japans
reliance upon the United States for economic assistance. Trade with
the U.S.S.R,
F C -R -F-, SECURITY INFOR11TION
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S E C R E T - SECURITY INFORTATION
(Section II Cont'd) -2-
the U.S.S.R. and its European satellites was controlled similarly,
but since Japanis trade with these countries under normal circum-
stances was relatively unimportant, controls applied to such trade
had no significant impact on Japan.
Vhith the entry of the Chinese Communists into the Korean War,
the Japanese Government, on December 6, 1950, banned exports to
China, North Korea, Hong Kong, and Macao of all raw materials and
semi-processed and manufactured goods subject to licensing controls
in Japan. The Japanese Government also invalidated all export
licenses for those areas which had been approved before that date.
The Japanese Export List was enlarged during December 1950 and
January 1951 and other steps were taken to tighten Japanese controls.
Shipments of controlled goods to Hong Kong were made contingent upon
receipt of certification from the Hong Kong Government that such
goods were for essential use in Hong Kong and not for transshipment
to other areas. Goods landed in Japan for transshipment were also
made subject to export licensing.
During the period since-January 1951 the list of commodities
subject to Japanese licensing controls has been further expanded
several times and now includes virtually all commodities except the
following: foodstuffs (other than staple foodstuffs), raw silk and
silk fabrics, woolen fabrics, bicycles, household-type sewing ma-
chines, watercraft under 18 feet, hand-powered agricultural machinery,
hand-operated office machinery, household utensils, toys, stationery
supplies, cigarette paper and Japanese handmade paper, some cello-
phane products, household remedies, and miscellaneous adornments for
personal use. Some of the commodities on the Japanese Government
Export Control List, notably many types of cotton and rayon textiles,
were, however, placed on the list in order to prevent unreasonably
low export prices rather than because of destination controls. Sev-
eral items not covered by the latest available official list are
reported to be under consideration as future additions; these in-
clude silk fabric, secondary textile products (handkerchiefs,
scarves, woolen hosiery goods), pottery and earthenware for table
use, enameled ironwares, canned tuna, frozen tuna, and sewing ma-
chines.
Trade between Japan and Communist China is conducted on a
barter basis through the use of escrow or back-to-back letters of
S E C R E T SECURITY INFORMMiTION
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S E C R E T
(Section II Conttd) -3-
SECURITY INFORMATION
credit. SCAP apprc~.val is required for such transactions.
The general question of Japan' s expo. rt cL ntrols was reviewed
in an exchange of telegrams between SCAP and the Departments of
State, Treasury, and Army in February and March of 1951. The out-
going message to SCAP indicated that because of the prospective
peace settlement it wculd be politically undesirable to compel
Japan to impose exp