EXECUTIVE COMMITTEE OF THE ECONOMIC DEFENSE ADVISORY COMMITTEE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00014A000100120011-7
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: July 11, 2000
• Sequence Number: 11
• Publication Date: November 4, 1954
• Content Type: REQ

Approved For Release 2001/03/02 : CIA-RDP64-000t4XkA0100
*DOC Exempt Letter On File*
EXECUTIVE CO f aTTEE OF THE
ECONO C DEFENSE ADVISORY COPTIITTEE
Second_European EDO Conference Papers
ED/EC D-80/22
November I , 1954
U. S. Licensing Policies, Enforcement and Compliance Action
IV. F. (A) U. S. Licensing Policies
(1) Soviet Bloc
U. S. licensing to the Soviet Bloc, other than communist China
and North Korea, is based on the premise that the U. S. has no desire to
withhold non-strategic goods and that trade in such goods is permissible
although not necessarily encouraged by the U. S. Government. There are
three general exceptions to this policy: (1) items in short supply in the
U. S.; (2) subsidized agricultural products in U. S. Government stocks; and
(3) a few specified items, which, although not strategically rated, are
deemed to present U. S. public opinion problems if shipped to the Bloc
(e.g., portable metal bridges).
With regard to strategic goods, the strategic rating scheme employed by
COCOM is generally paralleled in the U. S. Faster Export Security List, with
Parts C-I, C-II, and C-III being equivalent to IL I, II, and III. In addition,
Part C-IV of ? SL contains items to be unilaterally controlled to the Bloc by
the U. S. Such unilateral control is based on the unique or predominant
world-wide supply position of the U. S. (1(a) items) or the public opinion
factor mentioned above (i(b) items). U. S. licensing policy does not fully
parallel the practice of COMI countries, however, since at the present time
zero quotas have been established for all C-II and a number of C-III items,
The balance of C-III items may ('IS" items) be licensed after giving weight
to such factors as the cumulative effect of previous U. S. licensing, the
level of total free-world trade in the item with the Bloc, and intelligence
information bearing on shortages in the Bloc bearing on Soviet war potential.
Antibiotics, although not listed in MIESL, may not be licensed to the Soviet
Bloc except as part of gift parcels or for distribution by appropriate
eleemosynary organizations.
(2) Friendly Countries - General
Shipment of non-strategic goods requires no validated license to
friendly countries and strategic goods are freely licensed unless such goods
make possible the exportation of rated goods by these countries to the Soviet
Bloc, and thus frustrate U. S. licensing controls to the Bloc. However,
licenses are not denied for strategic goods unless such action will in fact
eliminate or reduce significantly shipment by the friendly country to the
Bloc of rated goods. Actions under the non-frustration policy are not taken
as a substitute for negotiation leading toward agreed international levels of
control.
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(3) Friendly Countries - Special Destinations
(a) Austrian Licensing Policy
Based on individual consignee checks made in Austria
for all proposed exports involving strategic materials.
Recommendations made directly to BFC by the Austrian Trade
Advisory Panel (TAP).
nationals.
(b) Licensing Policy for Finland
Licenses approved except for military goods and C-I
and C-II items when Finland is supplying like items to the
Bloc. Denials not made when such action would (1) force
greater reliance on Russia, (2) cause undue economic hardship,,
and (3) cause Russian retaliation against Finland.
(c) Indo-China Licensing Policy
Communist-controlled areas: deny all applications
except for reasonable quantities of non-strategic goods for
local consumption.
Haiphong Enclave: approve non-strategic goods rather
freely for use in the Enclave and strategic goods only in the
exceptional case related to the purpose of the evacuation,
Free Viet-Nam, Cambodia, and Laos: no control on
non-strategic goods, but approval of strategic goods in
reasonable quantities in the free area. Extensive use of
pre-licensing checks to determine consignee reliability?
(d) Licensing Policy for Hong Kong
Approve Positive List and rated items, provided no
inventory accumulation, no movement of the items regardless
of origin from Hong Kong to communist China, and no other
security risks. Approve non-rated, non-Positive List items..
provided no inventory accumulation and no significant movement
of U. S. origin goods to China. General license for non-
strategic items which reflect lack of China demand.
(e) Licensing Policy for Macao
Deny rated and short supply items except under special
circumstances. Approve others to meet demonstrated short term
requirements for local consumption.
(!.G) U. S. Licensing Policy for Communist China and North Korea
No changes. Embargo. Gift parcels permitted for interned U. S.
CONFIDENTIAL
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IV. F. (B) Enforcement and Compliance Action
U. S. export control enforcement has two main objectives --
preventing illegal transshipments of strategic U. S. goods to Soviet Bloc
countries, and preventing abuses of the integrity of the export licensing
and Customs clearance systems. When, despite all reasonable precautions,
illegal acts occur, enforcement becomes concerned with the detection,
investigation and prosecution of the wrongdoers, and even more importantly,
the creation of new and better procedures designed to prevent repetition.
U. S. or foreign nationals may become involved in these enforcement
activities and appropriate sanctions have been devised to deal with both.
BFCts Investigation Staff is equipped to deal with the U. S. firms and
individuals, but it must rely very heavily on help from Economic Defense
Officers to uncover violations occurring abroad and to provide the evidence
necessary to punish the violators, In working with Economic Defense Officers
on these cases, BFC takes into account country problems of policy and. proce-
dure, and endeavors to limit its requests for investigative aid to the
capacity of the foreign service post to handle within the framework of local
conditions.
Since the August changes in the commodity lists, BFC has been re-examin-
ing its enforcement program and has determined to intensify its efforts in
the transshipment field as this seems to be the area in which the most
serious violations are now appearing.
CONFIDENTIAL
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