RECENT DEVELOPMENTS IN EAST-WEST RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70B00338R000300070027-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 98
• Document Creation Date: December 19, 2016
• Document Release Date: September 12, 2005
• Sequence Number: 27
• Publication Date: October 18, 1966
• Content Type: OPEN

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HOLD FOR RELEASE?WEDNESDAY A.M., JANUARY 18, 1967
RECENT DEVELOPMENTS IN EAST-WEST
RELATIONS
HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
EIGIITY-NINTH CONGRESS
SECOND SESSION
OCTOBER 18, 1966
Printed for the use of the Committee on Foreign Affairs
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1966
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COMMITTEE ON FOREIGN AFFAIRS
THOMAS E. MORGAN, Pennsylvania, Chains an
ilLEMENT J. ZABLOCKI, Wisconsin
,)MAR BURLESON, Texas
EDNA F. KELLY, New York
WAYNE L. HAYS. Ohio
.kltM [STEAD T. SELDEN, Jo., Alabama
ItRA.TT O'HARA, Illinois
L. IL FOUNTAIN, North Carolina
IlANTE Ii. FASCELL, Florida
LEONARD FARBSTEIN, New York
C HA R LES C. DIGGS, JR., Michigan
],11NDLEY BECKWORTH, Texas
I (A RRIS B. McDOWELL, Jo., Delaware
WILLIAM T. MURPHY, Illinois
CORNELIUS E. GALLAGHER, New Jersey
IZOBERT N. C. NIX, Pennsylvania
.COIN S. MONACAN, Connecticut
:DONALD M. FRASER, Minnesota
RONALD BROOKS CAMERON, California
II.E.NJA,M-IN S. ROSENTHAL, New York
:=:DWARD It. ROYBAL, California
JOHN C. CULVER, Iowa
LEE H. HAMILTON, Indiana
COY I. McVICKER, Colorado
PRANCES P. BOLTON, Ohio
E. ROSS ADAIR, Indiana
WILLIAM S. NIAILITA RD, California.
PETER II. B. FRELINGITUYSEN, New Jersey
WILLIAM S. BROOMFIELD, Michigan
J. HIVING WHALLEY, Pennsylvania
H. It. GROSS, Iowa
E. Y. BERRY, South Dakota
EDWA RD J. DERWINSKI, Illinois
F. BRADFORD MORSE, Massachusetts
VERNON W. TrromsoN, Wisconsin
JAMES Cl. FULTON, Pennsylvania
novo CRAWFORD, Staff Administrator
ROY J. BULLOCK, Senior Staff Consultant
ALBERT C. F. WESTPHAL, Staff Consultant
FRANKLIN J. SCHUPP, Staff Consultant
ROBERT P. BRANDT, Staff Consultant
HARRY C. CROMER, Staff Consultant
PHILIP B. BILLINGS, Staff Consultant
MARIAN A. CZARNECKI, Staff Consultant
MELVIN 0. BENSON, Staff Consultant
JUNE NIGH, Senior Staff Assistant
lirmus C. MATTAs, Staff Assistant
HELEN L. HASHAGEN, Staff Assistant
MARY LOUISE O'BRIEN, Staff Assistant
MARY M. LALOS, Staff Assistant
Doors B. MCCRACKEN, Staff Assistant
JEAN E. SMITH, Staff Assistant
ROBERT J. BuwEN, Clerical Assistant
SUBCOMMITTEE ON EUROPE
EDNA F. KELLY, New York, Chairman
WAYNE L. HAYS, Ohio PETER H. B. FRELINGHUYSEN, New Jersey
A RWISTEAD I. SELDEN, JR., Alabama .r. IRVING VirHALLEY, Pennsylvania
CORNELIUS E. GALLAGHER, New Jersey EDWARD J. DERWINSKL Illinois
I,INDLEY BECKWORTH, Texas JAMES G. FULTON, Pennsylvania
JOHN S. MONAGAN, Connecticut
HARRIS B. McDOWELL, JR., Delaware
LEE IT. HAMILTON, Indiana
MARIAN A. CZARNECK/, Staff Consultant
Donis B. MCCRACKEN, Staff Assistant
Includes the European "Captive Nations."
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Greenwald, Joseph A.
Lionel Trade Policy
McNeill, Robert L.,
Policy
Sauer, 11011. Walter C
Import Bitiik
Stoessel, Walter .1., jr.,
Affairs
CONTENTS
LIST OF WITNESSES
, Deputy Assistant Secretary of State for Interna-
and Economic Defense_
)(linty Assistant Secretary of Commerce for Trade
First Vice President and Vice Chairman, Export-
Deputy Assistant Secretary of State for European
APPENDIX
Current Export Bulletin No. 911, U.S. Department of Commerce, October
12, 1966, "Revisions in the Commodity Control List"
Page
6
10
13
8
67
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
TUESDAY, OCTOBER 18, 1966
IIousr. OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,
SUBCOMMITTEE ON EUROPE,
Washington, D.C.
EXECUTIVE SESSION
The subcommittee met, pursuant to notice, at 10 :40 a.m., in room
2255, Rayburn Building, Hon. Edna F. Kelly (chairman of the sub-
committee) presiding.
Mrs. KELLY. The subcommittee will please come to order.
We meet this morning to discuss with representatives of the execu-
tive departments, U.S. policy on East-West relations as reflected in
President Johnson's speech of October 7 to the National Conference of
Editorial Writers.
If there is no objection, I shall place the text of that speech in the
record at this point.
(There was no objection. The speech referred to follows:)
REMARKS OF PRESIDENT LYNDON B. JOHNSON TO NATIONAL CONFERENCE OF
EDITORIAL WRITERS
Mr. Clendennin, Mr. Secretary, Mr. Ambassador, members of the Conference of
Editorial Writers, ladies and gentlemen:
I am a little baffled by this room. It makes a speaker have to talk out of both
sides of his mouth.
Since the Secretary took you on a quick trip around the world, I hope you will
pardon me if I just ask you to go across the Atlantic with me.
I remember some years ago Prsident Franklin D. Roosevelt addressed the
Daughters of the American Revolution. His opening words were not his usual,
"My Friends," but instead he said, "Fellow Immigrants."
And he was right. Most of our fathers came from Europe?East or West,
North or South. They settled in London, Kentucky; Paris, Idaho; and Rome,
New York. Chicago, with Warsaw, is one of the great Polish cities of the world.
And New York is the second capital of half of the nations of Europe. That really
is the story of our country.
Americans and all Europeans share a connection which transcends political
differences. We are a ;single civilization; we share a common destiny; our future
is a common challenge.
Today two anniversaries especially remind us of the interdependence of
Europe and America.
On September 30, 17 years ago, the Berlin airlift ended.
On October 7, just three years ago, the Nuclear Test Ban Treaty was
ratified.
There is a healthy balance here. It is no accident. It reflects the balance
the Atlantic Allies have always tried to maintain between strength and con-
ciliation, between firmness and flexibility, between resolution and hope.
The Berlin airlift was an act of measured firmness. Without that firmness,
the Marshall Plan and the recovery of Western Europe, of course, would have
been impossible.
1
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lllhat hopeful and progressive achievement, the European Economic Commu-
nity, could never have been born.
The winds of change which are blowing in Eastern Europe would not have been
il,dt here today.
All these are the fruits of our determination.
The Test Min Treaty is the fruit of our hope. With mon. than 100 other co-
signers we have committed ourselves to advance from deterrence through terror
toward a more cooperative international order. We must go forward to banish
all nuclear weapons?and to banish war itself.
So a just peace remains our goal. But we know that the world is changing.
Our policy must reflect the reality of today--not yesterday. In every part of
the world, new forces are standing at the gates : new countries, new aspirations :
new men. In this spirit, let us look ahead to the tasks that confront us today
in the Atlantic nations, as T look ahead a little later to the tasks that confront us
in another part of the world as T travel 25,000 miles in 1-.1n. Pacific area.
Europe has been at peace slime 1945. But it is a restless peaee.--shadowed by
the threat of violence.
Europe is partitioned. An unnatural line runs through the heart of a very
great and a very proud nation. History warns us that. until I his harsh division
has been resolved, peace in Europe will not be secure.
We must turn to one of the great no tasks of our generation?and that
unfinished task is ma king Europe whole again.
Our purpose is not to overturn II her governments, but to help the people of
Edrope to achieve:
a continent in which the peoples of Eastern and Western Europe work
shoulder to shoulder together for the common good ;
:1 continent in which alliances do not confront each other in bitter hos-
tility, but instead provide a framework in which West and East en n act
together in order to assure the security of all.
in a rest ored Europe, Germany can and will be united.
This remains a vital purpose of American policy. We real. r:; ted and reaffirmed
it to Chancellor Erhard just a few I lays ago. Tt can only be accomplished
througth a growing- reconciliation, because there is no shortctit.
We must move ahead on three fronts :
First, to modernize NATO and strengthen other Atlantic Alliances.
Second, to further the integration of the Western European community.
Third, to quicken progress in East-West relations.
Nlay I speak to each of these in turn.
Our lirst concern is to keep NATO strong, and to keep it modern and to keep it
abreast of the times in which we live.
The Atlantic Alliance has already proved its vitality. Together, we have faced
the threats of peace which have confronted us--and we shalt meet those which
may confront us in the future.
Let no one doubt ever for a moment the American commitment. We shall not
ever unlearn the lesson of the 30's, when isolation and withdrawal were our
share in the common disaster.
We are conanitted, and we are committed to remain firm.
lint the Atlantic Alliance is a living- organism. It must adapt it to the
changing conditions.
Much is already being done to modernize its structures :
we are streamlining NATO command arrangements:
we are moving to establish a permanent nuclear planning committee :
we are increasing the speed and certainty of supply across the Atlantic.
However, there is much more that we can do.
There is much more that we must do.
The Alliance must become a forum, a forum for increasingly close consulta-
tions. These should cover the full range of joint concerns---from East-West
relations to crisis management.
The Atlantic Alliance is the central instrument of the entire Atlantic com-
munity. But it is not the only one. Through other institutions, the nations of
the Atlantic are now hard at work on constructive enterprise.
In the Kennedy Round, we are negotiating with the other free world nations
to reduce tariffs everywhere. Our goal is to free the trade of the world, to free
it from arbitrary and artificial constraint s.
We are engaged on the problem of international monetary reform.
We are exploring how best to develop sci Once and technology as a common
resource. Recently the Italian Government has suggested an approach to nar-
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rowing the gap in technology between the United States and Western Europe
That proposal, we think, deserves very careful study and consideration. The
United States stands ready to cooperate with all of the European nations on
all aspects of this problem.
Last?and perhaps really most important?we are working together to ac-
celerate the growth of the developing nations. It is our common business to
help the millions in these developing nations improve their standards of life, to
increase their life expectancy, to increase their per capita income, to improve
their health, their minds, their bodies, to, in turn, help them really fight and
ultimately conquer the ancient enemies of mankind: hunger, illiteracy, ignor-
ance, disease. The rich nations can never live as an island of plenty in a
sea of poverty.
Thus, while the institutions of the Atlantic community are growing, so are
the tasks that confront us multiplying.
Second among our tasks is the vigorous pursuit of further unity in the West.
To pursue that unity is neither to postpone nor to neglect for a moment our
continuous search for peace in the world. There are good reasons for this.
A united Western Europe can be our equal partner hi helping to build
a peaceful and just world order;
a united Western Europe can move more confidently in peaceful initiatives
toward the East;
unity can provide a framework within which a unified Germany can be
a full partner without arousing fears.
We look forward to the expansion and to the further strengthening of the
European community. Of course, we realize that the obstacles are great. But
perseverance has already reaped larger rewards than many of us dared hope
for only a few years ago.
The outlines of the new Europe are clearly discernible. It is a stronger, it is
an increasingly united but open Europe?with Great Britain a part of it?and
with close ties to America.
Finally, thirdly, one great goal of a united West is to heal the wound in
Europe which now cuts East from. West and brother from brother.
That division must be healed immediately. It must be healed with the
consent of Eastern European countries and consent of the Soviet Union. This
will happen only as East and West succeed--succeed in building a surer founda-
tion of mutual trust.
Nothing is more important than peace. We must improve the East-West en-
vironment in order to achieve the unification of Germany in the context of a
larger, peaceful and prosperous Europe.
Our task is to achieve a reconcilation with the East?a shift from the narrow
concept of coexistence to the broader vision of peaceful engagement.
Under the last four Presidents, our policy toward the Soviet TTnion has been
the same. Where necessary, we shall defend freedom: where possible, we shall
work with the East to build a lasting peace.
We do not intend to let our differences on Vietnam or elsewhere ever prevent
us from exploring all opportunities. We want the Soviet Union and the nations
of Eastern Europe to know that we and our allies shall go step by step with
them just as far as they are willing to advance.
Let us?both Americans and Europeans?intensify, accelerate, strengthen our
determined efforts.
We seek healthy economic and cultural relations with the Communist states.
am asking for early Congressional action on the United Stales-Soviet
Consular Agreement.
We have just signed a new United States-Soviet Cultural Agreement.
We intend to press for legislative authority to negotiate trade agreements
which could extend most-favored-nation, tariff treatment to European Com-
munist states.
We have just concluded an air agreement with the Soviet Union.
Today I am announcing the following new steps:
We will reduce export controls on East-West trade with respect to hundreds
of non-strategic items ;
have just today signed a determination that will allow the Export-Im-
port Bank to guarantee commercial credits to -four additional Eastern Euro-
pean countries?Poland, Hungary, Bulgaria and Czechoslovakia. This is
good business. And it will help us--it will help us to build the bridges to
Eastern Europe that I spoke of in my address at VMI only a few months
ago.
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The Secretary of State is now reviewing the possibility of easing the
burden of Polish debts to the United States through expenditures of our
Polish currency holdings which would be, we think, mutually beneficial to
both countries.
The Export-Import Bank is prepared to finance American exports for the
Soviet-Italian FIAT auto plant.
We are negotiating a civil air agreement with the Soviet Union, which I
referred to. This will, we think, greatly facilitate tourism in both directions.
This summer the American Government took additional steps to liberalize
travel to Communist countries in Europe and in Asia. We intend to
liberalize these rules still further in an attempt to promote better under-
standing and increased exchanges.
In these past weeks, the Soviet Union and the United States have begun
to exchange cloud photographs that are taken from the weather satellites.
You can see in these and many other ways the ties with the East will be
strengthened?by the United States and by other Atlantic nations.
Agreement on a broad policy to this end, therefore, should be sought in existing
Atlantic organs.
The principles which should govern East-West relations are now being dis-
cussed in the North Atlantic Council.
The OECD can also play an important part in trade and in contacts with the
East. The Western nations can there explore the ways of inviting the Soviet
Union and the Eastern European countries to cooperate in tasks of common in-
terest and common benefit.
Hand-in-hand with these steps to increase East-West ties must go measures to
remove territorial and border disputes as a source of friction in Europe. The
Atlantic nations oppose the use of force to change existing frontiers. That is a
bedrock, too, of our American foreign policy. We respect the integrity of a
nation's boundary lines.
The maintenance of old enmities is not really in anyone's interest. Our aim
is a true European reconciliation. We so much want to make this clear to the
East.
Further, it is our policy to avoid the spread of notional nuclear programs?in
Europe and elsewhere in the world.
That is why we shall persevere in efforts to try to reach an agreement banning
the proliferation of nuclear weapons.
We seek a stable military situation in Europe?one in which we hope that
tensions can be lowered.
To this end. the United States will eoittinue to play its part in effective Western
deterrence. To weaken that deterrence might now create temptations and
could endanger peace.
The Atlantic Allies will, of course, continue together to study what strength
NATO needs, in light of the changing technology and the current threat.
Reduction of Soviet forces in Central Europe would, of course, affect the extent
of that threat.
If changing circumstances should lead to a gradual and balanced revision in
force levels on both sides, the revision could?together with the other steps that
I have mentioned?help gradually to shape an entirely new political environment.
The building of true peace and reconciliation in Europe, of course, will be a
very long process.
The bonds between the United States and its Atlantic partners provide the
strength on which the entire security of this world depends. Our interdepend-
ence, there, is complete.
Our goal, in Europe and elsewhere, is, first of all?always?a just and secure
peace. It can most surely be achieved by common action. To this end, I pledge
my country's best efforts:
best efforts to achieve new thrust for the Alliance;
to support movement toward Western European unity;
to bring about a far-reaching improvement in relations between the East
and the West.
Our object is to end the bitter legacy of World War II.
Let all of those who wish us well, and all others also, know that our guard will
be up but our hand will always be out.
The American people love peace and they hate war. We do not believe that
might makes right. So in pursuit of peace history is aware of our commit-
ments?the Marshall Plan, the Truman Doctrine, to NATO and to SEATO. We
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have been tested in Berlin and in Korea, in the Dominican Republic, and our
brave men are being tested at this hour in Vietnam.
In every instance, our purpose has been peace, never war. Self-determination
instead of selfish aggression. We believe that moral agreements are much to be
preferred to military means. The conference table instead of the battlefield. But
Americans will never close their eyes to reality. We back our word with dedica-
tion, and we also back it with the united resolve of a patient, of a determined,
of a freedom-loving and a peaceful people. Together we shall never fail.
Mrs. KELLY. There was a new tone of urgency in the President's
speech.
He said that the East-West division of Europe "must be healed im-
mediately."
He said that both Americans and Europeans must "intensify, ac-
celerate, and strengthen our determined efforts" to achieve a reconcilia-
tion with the East.
And he pledged our country's "best efforts" to bring about a far-
reaching improvement in relations between the East and the West.
Our subcommittee will be interested to learn why this note of
urgency?and why at this particular time?
Secondly, in his speech of October 7, President Johnson listed
several "new steps" being taken by the U.S. Government to achieve
what he called "a shift from the narrow concept of coexistence to the
broader vision of peaceful engagement" with the East.
The term "new steps" is the President's own, and it was used to
describe--
1. A reduction in export controls on East:West trade;
2. A determination authorizing the Export-Import Bank to
guarantee commercial credits to Bulgaria, Czechoslovakia, Hun-
gary, and Poland;
3. Possible Export-Import Bank financing of American ex-
ports for the Soviet-Italian Fiat auto plant;
4. Possible easing of the burden of Polish debts to the United
States;
5. Further liberalization of regulations governing travel to
Communist countries; and
6. Exchange between the United States and the U.S.S.R. of
cloud photographs taken from weather satellites.
In this regard, our subcommittee will be interested to find out what
are the several hundred items which are being removed from the ex-
port controls list; why they are being removed at this time; what types
of exports to Bulgaria, Czechoslovakia, Hungary, and Poland and I
want to know the terms, too?will be financed by the Export-Import
Bank; what are the details of the Soviet-Fiat arrangements, and why
should the United States finance any part of it; and so on.
Finally, the President also stated in his October 7 speech that
NATO should become a forum for "increasingly close consultations
* * * [on] East-West relations"--and that, indeed, the principles
which should govern East-West relations are right now being dis-
cussed in the North Atlantic Council.
This, of course, is what our subcommittee recommended some time
ago.
In this connection, we will be interested to find out what progress is
being made in those discussions?and what differences of opinion on
this subject exist among the members of the NATO Council.
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We have before us this morning representatives of the State and
Commerce Departments, and of the Export-Import Bank.
Gentlemen, we would like to invite you to sit down at the witness
table.
understand that you are prepared to open with brief comments
covering different aspects of the subject at hand; that Mr. Greenwald
and Mr. Stoessel will address themselves to issues of foreign policy;
that Mr. McNeill will touch upon export controls; and that Mr. Sauer
will address himself to the new developments as they affect the policy
of the Export-Import Bank.
We will begin with Mr. Greenwald.
Mr. Greenwald, I see you have a short statement. I hope von gen-
tlemen will realize that the House meets at 11 o'clock. If there are
any quorum calls, Mr. Monagan and I will alternate in the chair.
Is that all right, John?
Mr. Merv-Au-AN. Yes.
Mrs. KELLY. Mr. Greenwald, will you proceed.
(The prepared statement of Mr. Greenwald follows :)
S PATEMENT RY JOSEPH A. GREENWALD, DEPUTY ASSISTANT SECRETARY OF STATE FOR
INTERNATIONAL TRADE POLICY AND ECONOMIC DEFENSE RE STATES OF TJ.S. POLICY
ON EAST-WEST ECONOMIC TRANSACTIONS IN LIGHT OF PRESIDENT JOHNSON'S
SPEECH OF OCTOBER 7
President Johnson's speech of October 7 was an important statement of the
guiding principles in our European policy. It represents a comprehensive syn-
thesis of our problems and objectives within the Atlantic Alliance as well as our
hopes and intentions with respect to the advancement of long-term prospects
for peaceful relations with Eastern Europe.
One of the major points, therefore, which the President emphasized was the
task of reconcilitation with the East as "a shift from the narrow concept of co-
existence to the broader vision of peaceful engagement". Trade with the coun-
tries of Eastern Europe is certainly one of the main tools which can be used in
working towards the objective set by the President, and in his remarks he
indicated certain concrete steps in the field of trade and other economic relation-
ships which are being taken.
The important point that I would like to emphasize as a basis for our discussion
today is that the President's articulation of East-West policy and the specific
measures which he listed represent a strong reaffirmation and continuation of a
direction of policy which he has stated both in general and in specific terms on
prior occasions.
Thus his statement of intention to press for legislative authority to extend
most-favored-nation tariff treatment to individual Communist countries was a
reaffirmation of the Administration's proposals already submitted to the Con-
gress.
The removal of individual license requirements for certn in exports to the
countries of Eastern Europe is a substantial broadening of the general license
treatment that has for some time been available for trade with Eastern Europe.
The determination that it is in the national interest to allow f he Export-import
Bank to guarantee commercial credits for trade with Poland, Hungary, Bulgaria
0701 Czechoslovakia is an extension of similar determinations with respect to
Yugoslavia and Romania and with respect to agricultural trade with the Soviet
Union and the other countries of Eastern Europe.
The proposed sale of American equipment to 'Italy for use in i he construction of
a passenger automobile plant for the Soviet Union is consistent with our well
established policy of encouraging trade with the Soviet Union in non-strategic
equipment for the production of consumer goods.
We believe that these measures are all an appropria to part of our general policy
towards the Soviet T'nion and Eastern Europe and that they will be useful in
ad va n el fig our national objectives.
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STATEMENT OF JOSEPH A. GREENWALD, DEPUTY ASSISTANT SEC-
RETARY OF STATE FOR, INTERNATIONAL TRADE POLICY AND
ECONOMIC DEFENSE
Mr. GREENWALD. Thank you, Madam Chairman. I think all the
statements we have this morning will be very brief. The main point
of my remarks is to describe the, President's statement as a compre-
hensive synthesis of our problems and objectives within the Atlantic
alliance as well as our hope.s and intentions with respect to the ad-
vancement of long-term prospect s for peaceful relations with Eastern
Europe.
One of the major points, and you quoted from the President's speech,
in this task of reconciliation with the East is the question of trade.
This is one of the main tools we have to use in working toward the
objective of reconciliation that the President has set out. He indi-
cated some concrete. steps which are being taken in the field of trade
and other economic relat ionships. his statement on East-West policy
and the specific measures that he listed are basically a policy reaffirma-
tion, although as you pointed out he referred to them as new steps, they
are really new steps in the continuation of a direction of policy which
he has set forth in both general and specific terms on prior occasions.
I would like to give you some examples
Mrs. KELLY. You (i'laim then there is no change in policy I
Mr. GREENWALD. There, is no basic change in policy. The new steps
are to implement policy that has been set forth in the past. Ills state-
ment to press for authority on most-favored-nation treatment has al-
ready been proposed in the draft legislation which has been submitted
to the Congress by the Secretary of State. We hope the Congress will
act upon this.
The removal of the individual licensing requirements
Mr. MoNAGAN. Was that legislation submitted some time ago?
Mr. GREENWALD. It was submitted earlier this year.
Mr. MoNAcAN. I just wanted to make clear that you were not refer-
ring to some new bill.
'fir. GREENWALD. This is the legislation having to do with most-
favored-nation treatment, which was submitted in the spring of this
year, April or May. I am not absolutely certain about the date.
Similarly, the action that was announced on individual licensing
requirements follows a kind of treatment which has been applied for
some time to trade with Eastern Europe, and Mr. McNeill will go into
that in more detail.
The determination that it is in the national interest to allow the
Export-Import Bank to guarantee commercial credits for trade with
Poland, Hungary, Bulgaria, and Czechoslovakia is an extension of
similar determinations with respect to Yugoslavia and Rumania and.
with respect to agricultural trade with the Soviet Union and the other
countries of Eastern Europe.
The proposed sale of American equipment to Italy for use in the.
construction of a, passenger automobile plant for the Soviet Union
is consistent with our well-established policy of encouraging trade
with the Soviet Union in nonstrategic equipment for the production
of consumer goods.
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We believe that these measures are all an appropriate part of out
general policy toward the Soviet Union and Eastern Europe and that
they will be useful in advancing our national objectives in this field.
Mrs. KELLY. Those actions and items will be taken up by us in detail
at this point
Mr. GREENWALD. I would like Mr. Stoessel to add a few brief re-
marks
Mrs. KELLY Before we begin questioning?
Mr. MONAGAN. Why not let them all give the statements.
MT. GREENWALD. The statements will be brief. Mr. Stoessel will
follow with some brief remarks
Mr. MONAGAN. I think Mr. Stoessel and Mr. Greenwald would
have points that would be similar.
Mr. GREENWALD. I haven't touched on the, political aspects.
Mr. MONAGAN. We could question them as a panel after they finish.
Mrs. KELLY. That will be fine.
MT. MONAGAN. Let's not rush.
Mrs. KELLY. Mr. Stoessel, will you proceed.
(The prepared statement of Mr. Stoessel follows:
STATEMENT BY WALTER J. STOESSEL, JR., DEPUTY ASSISTANT SECRETARY OF STATE
FOR EUROPEAN AFFAIRS RE STATUS or' U.S. POLICY ON EAST-WEST ECONOMIC
TRANSACTIONS IN LIGHT OF PRESIDENT JOHNSON'S SPEECH OF OCTOBER 7
In his speech of October 7, the President reviewed our broad foreign policy
objectives and the status of our relations with Europe. He described our basic
purpose as being to help the people of Europe to achieve a united Europe, where
the people of Eastern and Western Europe will work together for the common
good, and where the alliances will provide a framework so that East and West
can work together to assure the security of all. In order to achieve these aims,
he said we should (1) keep NATO strong, (2) pursue further unity in the West,
and (3) quicken progress in East-West relations.
It is with the status of our East-West relations that we are concerned today.
The President emphasized that "our task is to achieve a reconciliation with the
East." He said that our policy toward the Soviet Union has been the same under
the last four Presidents, and that, "Where necessary, we shall defend freedom;
where possible, we shall work with the East to build a lasting peace."
If the question is asked as to why we are seeking to expand our trade and other
economic relations with the Soviet ITnion and with Ea stern Europe at the same
time that we are fighting Communist aggression in Viet-Nam. I would say that
resistance to such force is only one part of our strategy in seeking a peaceful
world. It is equally our purpose to show the Communist countries that their best
interests lie in promoting the well-being of their peoples through peaceful, con-
structive relations with the free world. Thus. while we withstand Communist ag-
gression in Viet-Nam, we seek other areas which offer promising prospects for
mutually beneficial East-West relationships. The President on October 7 said
"We do riot intend to let our differences on Viet-Nam or elsewhere ever prevent us
from exploring all opportunities."
The Communist world has undergone changes since Stalin's time which we be-
lieve it is very much in our interest to take into account. The Sino-Soviet bloc no
longer exists as a monolith. There are in varying degrees important, if not funda-
mental, differences among these countries. Most of them are showing signs of in-
creased independence in their own economic and political courses, as well as
greater concern for the needs of their citizens. In this situation, it is to our ad-
vantage to deal with these countries in a manner which responds to our own na-
tional interests as well as to the cause of peace and stability in the world. We be-
lieve the steps outlined by the President on October 7 further advance these aims.
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STATEMENT OF WALTER I. STOESSEL? JR., DEPUTY ASSISTANT SEC-
RETARY OF STATE FOR EUROPEAN AFFAIRS
Mr. STOESSEL. I will try to make my remarks even briefer than out-
lined in our statement. I would point out with regard to the Presi-
dent's speech on October 7, that it was not entirely on East-West rela-
tions. He also stressed the need to keep NATO strong, to pursue fur-
ther unity in the West, and to quicken progress in East-West relations.
You asked in your statement, Madam Chairman, as to the timing of
the speech. I think that part of the timing certainly had to do with de-
velopments in NATO at a time of difficulty in the NATO organization.
I think the President wanted to make clear his strong interest in the or-
ganization, to reaffirm the U.S. commitment to Europe, and to the aim
of German reunification and the need for unity in the West, as we at-
tempt to improve our relations with the East.
I am sure that he felt the time was propitious to be more specific
with regard to our moves in connection with Eastern Europe in view
of the U.N. General Assembly which was going on, the meetings which
Secretary Rusk was having with the foreign ministers of the Eastern
European countries, the Presidents own meeting with Gromyko and
that he felt the time was right to indicate in more concrete fashion what
he had in mind in the statement he made at Idaho Falls in August.
I know the question is sometimes asked as to why we are trying to
expand our trade and other economic relations will] the Soviet I Tn ion
and Eastern Europe at a time when we are fighting Communist ag-
gression. in Vietnam. In answer to that I would say that resistance
to such force is only one part of our strategy in seeking peace. It is
equally our purpose to show the Communist countries that their best
interest lies in promoting the well-being of their own peoples through
peaceful and constructi ye relations with the. free world.
Wo withstand Communist aggression in Vietnam, but at t he same
time we seek other areas which offer promising prospects for mutually
beneficial East-West relationships. As the President said in his
speech, we, do not intend to let our differences on Vietnani. or elsewhere
ever prevent us from exploring all opportunities.
The Communist. world, of course, has undergone many changes since
Stalin's time and we believe it is to our interest to take these changes
into account. The Sino-Soviet bloc no longer exists as a monolith.
.varying degrees there are important, if not fundamental, differences
among these countries. Most of them are showing signs of increas-
ing independence in their own economic and political courses as well
as greater concern for the needs of their citizens.
In this situation we feel it, is to our advantage to deal with these
countries in a manner which responds to our own national interest
as well as to the cause of peace and stability in the world. We be-
lieve the steps which the President outlined advance these aims.
Mrs. KELLY. Is that all of your statement?
Mr. STOESSEL. Yes.
Mrs. KELLY. Mr. -McNeill, would you like to proceed?
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10 RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
FIae prepared statement of Mr. McNeill follows :)
STATEMENT OF ROBERT L. MCN7ILL, DEPUTY ASSISTANT SECRETARY FOR TRADE
POLICY, DEPARTMENT OF COMMERCE
Madam Chairman and Members of the Committee :
I am very pleased to have this opportunity to appear before t lie Subcommittee
on Europe of the House Committee on Foreign Affairs. Your Committee has
asked for the views of the Department of Commerce on those remarks made on
41ctober 7, 1906 by President Johnson at the National Conference of Editorial
Writers concerning, U.S. trade relations with certain Eastern European countries.
The Department of Commerce fully supports the President's objectives and
Ids specific efforts to improve trade and other relations of the United States with
countries of Eastern Europe. The Department has a wide-ranging interest in all
of the matters mentioned in his reference to East-West relations. However, I
shall confine my remarks at this time to our trade relations with Eastern Europe.
including the U.S.S.R.
First. I wish to refer to the Depart ment's recent reduction in the number of
items requiring validated license to most Eastern European (lest Mations. Fol-
lowing the President's speech, the Department on October 12 issued its Current
Export Bulletin 941 which removed the validated export license requirement from
over 400 non-strategic items for shipment to Eastern European destinations.
except the Soviet-occupied Zone of Germany. The Subcommittee's Staff has
been supplied with copies of this bulletin.
In making these revisions we have removed front the speei fie licensing require-
ment and placed under our general license procedure additional commodities
that fall into the category of peaceful goods, which tray now b. freely exported
to these destinations. These commodities inelude textile produets. certain metal
manufactures and in chemical tea tethils and prodnets and a variety of
consumer goods. En taking this step. the Department consulted other interested
agencies, including Defen Se. State, Agrieulture. Interior, and fltellig-enee igen-
cie?-,. This action is part of a continuing effort by the DerwrilnDt to keep its
export control system up to date, to redoce the obstacles to doing business with
Eastern European countries wherever consistent with the national security and
welfare interests and to reduce the workload imposed -upon both the trading Nun-
munity and the Department. It represents a continuing polity rather than o de-
parture from basic policy. We believe such action improves the administrati:m of
the Export Control Act, is consistent with the security requirements of that Aet
one: fneilitates the President's objective of expanding peaceful t rade with Eastern
Europe:.
We believe that the President's statement will have a signitienti: ond po-itive
impact on the attitude of the U.S. trading community as well as of the broad
international trading community toward F.S. trade with Eastern Europe. E.*
businessmen are expected to be more willtng than in lint t to export lot r
oodeolul goods and technical data to the countries it Fast een Europe and to
import from them. The eventual result should be increased tale berwee a HIP
toil States and the Eastern European countries.
Regarding trade with Eastern Europe. total 1907i trade bet in the Western
'European countries (including Yugoslavia) and the Eastern Fur-mian area (in-
cluding the U.S.S.R. and Soviet Zone of (iermany) amounted to tiler titter St-,t
billion. divided roughly equally between exports and imports.. For the same pe-
riod. IS. trade with Eastern Europe amounted to about 5277 million, divided
about equally between exports and imports. This U.S. trade represented :Wont
0.5'7/, of total U.S. exports and about 0.7% of total U.S. imirmrt?-: in 1905. While
we do not foresee 11111 tehing Western Europe's trade with 1.....o4ern Efirop9, we
helreve there is room for substantial improvement in the T.S. slit' t of such triarle.
'rho Department has already acted imp it numerous -t,quests for authorization
to me r.S.-origin technology and equipment in completing e.,,aort transaylions
by Western European firms to Eastern European destinationn. in these trans-
actions most of the equipment is normally supplied by the West European firms,
but some of them involve sizable financial returns to the U.S. firms either from
direct e'vport to the Western European firins or through tile nye Incass.ullsi (n1 Hon
or I ireneos of the U.S. firms. We anticipate an increase in the number of such
transactions. As this occurs, we foresee that the returns to F.S. -firms may in-
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS 11
creasingly depend upon the willingness of the United States to share in the credit
arrangements involved, particularly in transactions requiring substantial sums.
In direct trade with Western European countries, the availability of credit
guarantees for industrial goods and technical data not only opens another credit
source to these countries?thus expanding their ability to purchase from the
United States?but also increases the competitiveness of the U.S. exporter in
obtaining a larger share of the Eastern European market. We believe that in the
past some worthwhile transactions have not materialized because of the marked
advantage achieved by other countries through their credit arrangements for
trade with Eastern Europe. More significant, however, will be the long-term
impact of such guarantee availability in enabling our industrial trade with these
countries to grow and to keep pace with their ability to earn larger amounts of
dollars and convertible foreign exchange and to exchange goods with us.
The legislative authority desired by the President to facilitate negotiation of
commercial agreements with Eastern European countries is of both psychological
and commercial importance. The potential trade significance of each agreement
would depend not only upon the country involved and the details of the agreement,
but also the willingness and ability of each Eastern European country to develop
products which are salable in the U.S. market, to produce in quantities necessary
to meet the needs of our type of market and to make other necessary arrange-
ments for marketing their products successfully in the United States. Over all,
we would expect such agreements to assist materially in increasing two-way U.S.
trade with these countries.
STATEMENT OF ROBERT L. McNEILL, DEPUTY ASSISTANT SECRE-
TARY FOR TRADE POLICY, DEPARTMENT OF COMMERCE
Mr. MCNEn.n. In the light of your request for brevity, I will talk
from my statement rather than read it formally into the record. First,
I would like to refer to the Department of Commerce's recent reduc-
tion in the number of items requiring validated licenses to most East-
ern European nations. Following the President's speech, the Depart-
ment on October 12 issued its Current Export Bulletin 941, which
removed the validated export license requirement from more than
400 nonstrategic items for shipment to Eastern European destinations
except the Soviet-occupied zone of Germany.
In making these. revisions we have removed from the specific licens-
ing requirement and placed under our general license procedure addi-
tional commodities that fall into the category of peaceful goods which
may now be freely exported to these Eastern European destinations.
These include textile products, certain manufactures and machinery,
chemical materials and products, and a variety of consumer goods.
In taking this step the Department consulted other interested agen-
cies, including the Departments of Defense, State, Agriculture, Inte-
rior, as well as the intelligence agencies. This action is part of a con-
tinuing effort by the Department to keep its export control system up
to date, to reduce the obstacles to doing business with Eastern Euro-
pean countries wherever consistent with the. national security and
welfare interest, and to reduce I he workload imposed upon both the
trading community and the export control authorities of the Depart-
ment of Commerce. The act ion represents a continuing policy rather
than a. departure -from basic policy.
We believe such action. improves the administrat ion of the Export
Control Act, is consistent with the security requirements of thatact,
and facilitates the President's objective of expanding peaceful trade
with 'Eastern Europe., We believe that the President's statement will
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12 RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
have a significant and positive impact on the attitude of the -U.S.
trading community as well as of the broad international trading
community toward IT.S. trade with Eastern Europe.
American businessmen are expected to be more willing than in the
past to export their peaceful goods and technical data to the coun-
tries of Eastern Europe and import products from Eastern European
countries. The eventual result we hope will be increased trade between
the United States and the Eastern European countries.
The legislative authority desired by the President to facilitate nego-
tiation of commercial agreements with Eastern European countries
is of both psychological and commercial importance. The potential
trade significance of each agreement would depend not only upon the
country involved and the details of the agreement, but a iso the willing-
ness and ability of each Eastern European country to develop prod-
ucts which are salable in the U.S. market, to produce in quantities
necessary to meet the needs of our type of market, and to make other
necessary arrangements for market i ug their products successfully in
the United States. Overall, we would expect such agreements to
assist materially in increasing two-way TI.S. trade with these. countries.
That is the completion of my statement.
Airs. KELLY. Thank you. 11.fr.
Without objection we will place in the record at this point the cover
page from the Current Export Bulletin No. 941, dated October 12,
1966, which outlines the changes recently made in the U.S. commodity
control list. The remainder of that bulletin, including the full list
of the commodities in question, will appear as appendix 1 to the record
of this hearing.
(There was no objection. The item referred to follows:)
(From Current Export Bulletin No. 941, Oct. 12, 19(301
Subject: Revisions in the Commodity Control List ( ? 399.1).
The U.S. Department of Commerce made the following announcement today:
'Secretary of Commerce John T. Connor today announced that the Department
of Commerce is revising the Commodity Control List to permit approximately
400 non-strategic commodities to move under general license to the U.S.S.R. and
other Eastern European Communist countries. Validated export licenses previ-
ously have been required for this movement. The revision does not apply to
the Soviet-controlled zone of East Germany, with which the United States has
no diplomatic relations. The Department of Commerce action followed Presi-
dent Johnson's announcement on Friday, October 7, that 'we will reduce export
controls on East-West trade with respect to hundreds of non-strategic items,' as
one of several measures designed to facilitate trade with Eastern Europe.
"In revising the List, the Department of Commerce has removed from the
specific licensing requirement commodities that fall into the category of peaceful
goods, which may be freely exported without any risks to United States national
interests. The commodities which are being placed under general license include
textile products, certain metal manufactures and machinery, chemical materials
and products and a variety of manufactured articles. The Commerce Depart-
ment consulted with other interested departments, including Defense, State,
Agriculture. Interior, and the Intelligence Community, in taking this step.
"Although the export of these commodities may now be made to communist
countries of Eastern Europe without prior specific approval of the Department
of Commerce, the requirement continues for individual licenses with respect to
other goods. Removal of the non-strategic commodities from the Commodity
Control List will reduce the administrative task of both business enterprises
which sell these commodities and the Government. Business firms will no
longer be required to apply for and await the issuance of a license before agree-
ing to a transaction. The changes in the List will also facilitate the President's
objective of expanding peaceful trade with Eastern Europe.
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"The Commodity Control List has also been revised to remove a few commodi-
ties from licensing controls for shipments to Hong Kong, Macao, and other
countries."
The details of the Commodity Control List revisions are described on the fol-
lowing pages.
Mrs. KELLY. Mr. Sauer, we will be happy to hear from you now.
(The prepared statement of Mr. Sauer follows:)
STATEMENT OF HON. WALTER C. SAUER, FIRST VICE PRESIDENT AND VICE CHAIRMAN
OF BOARD OF DIRECTORS, EXPORT-INIPORT BANK OF WASHINGTON
I believe it pertinent to the present inquiry to give a brief history of past
relations between the Export-Import Bank and Communist oriented countries.
Indeed, it may be of some interest to recall that the Export-Import Bank was
created to finance trade between the United States and the U.S.S.R. The time
was February 1934. An immediate and substantial increase in trade between
the .two countries was expected to follow United States recognition of the
U.S.S.R. which was extended in 1933. These expectations, of course, have
never come to pass and the U.S.S.R. has never actually applied for nor has
the Bank ever extended any financial a ssistance to that country.
Immediately following World War II but prior to the time Communist regimes
were established in those countries, the Bank extended credits to Czechosolvakia
and to Poland. These credits were recognized and serviced by the successor
Communist governments.
In the fall of 1950, acting in furtherance of avowed U.S. policy to assist
Yugoslavia, the Bank extended a credit of some $55 million to that country
and subsequently, in 1961 extended another credit for $50 million. Also, in the
late 50s, the Bank, acting as agent for and with funds furnished by the Mutual
Security Administration, extended credits of some $60 million to Poland.
In the summer of 1963, the U.S.S.R. and other Communist countries evidenced
interest in purchasing wheat in the United States. Credit terms were con-
sidered to be essential for any substantial purchases by these countries and
there ensued extended debate in the Congress on the advisability of the Export-
Import Bank's extending financial assistance for the purpose. The result was
that the Congress imposed a limitation on the Bank's authority to grant assist-
ance to Communist countries by including a provision in the Bank's Appropria-
tion Act of 1964, prohibiting the Bank from extending guarantees or credits
to any Communist country unless the President determined it to be in the na-
tional interest for the Bank so to do. The provision has been included in each
succeeding year's Appropriation Act.
In February 1964, the President made a determination that it was in the
national interest for the Export-Import Bank to issue guarantees in connection
with the sale of agricultural products to the U.S.S.R., Bulgaria, Czechoslovakia,
Hungary, Poland and Rumania. The only transactions that have been engaged
in by the Bank under this finding were guarantees of $24 million to Hungary
and of $4.2 million to Poland, covering the sale of corn, wheat and other agri-
cultural commodities.
At the same time that the President found it to be in the national interest
to engage in transactions for agricultural products to all the named Communist
countries, the President found it to be in the national interest for the Bank
to engage in transactions with Yugoslavia for all types of products and services.
Since that time, the Bank has engaged in transactions of about $70 million
covering the sale of capital goods to Yugoslavia.
In June 1964, the President determined it to be in the national interest for
the Bank to engage in transactions with Rumania for all types of products and
services. Pursuant to this finding the Bank has engaged in one transaction
involving $20 million for a petroleum plant.
In accordance with procedures instituted by the Bank, it has reported to the
Congress, as they occurred, each of the transactions it has engaged in with
Communist countries since 1964. It might be also mentioned that all of the
credits extended or guaranteed by the Bank to the Communist countries have
been paid as they became due although in the case of Yugoslavia there has been
one recent deferment granted for a relatively small amount.
Since the purpose of the Export-Import Bank is to finance the foreign trade
of the United States and since it is the only government agency which has the
authority to engage in such transactions with the countries involved, it is quite
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14 RECENT DEVELOPMENTS IN EAST-WEST TEL MONS,
appropriate that the Bank be the instrument for financing trade with Com-
munist countries when the President finds it to be in the national interest so to
do. On its part, the Bank is quite prepared, within the statutory authority
granted it by the Congress, to carry out the spirit of the President's determina-
tion of October 7th past that it is in 1-the national interest for the Bank to engage
in short, and medium-term transactions involving the :ate of all types of peaceful
goods and services to Bulgaria, Czechoslovakia, Hungary, and Poland.
STATEMENT OF HON. WALTER C. SAUER, FIRST VICE PRESIDENT
AND VICE CHAIRMAN OF BOARD OF DIRECTORS, EXPORT-IMPORT
BANK OF WASHINGTON
-kir. SAT-ER. Aladam Chairman and members of the committee, I will
i.,ouch the highlights of this brief Antement which I believe yon have
before von. It mipht be of interest lo ii men of the committee. par-
ticularly in connection with this inquiry, to recall Hilt the Export-
Iruport Bank W as c1e111ed in Febroa ry 1931- to finance rade with i the
1-7,S.S.R. This followed the recovtnition of Russia by the TTnited
States in the preceding fall of 1933.
It was expected to increase the trade. between tin two countries.
This never came io pass for obx-ions reasons. As a result, the. Bank
has never extended any assistance to the. U.S.S.R.
However, we have dealt with other Communist cot at IMMO-
diately following the war we extended credits to Czeelioslovakia, and
Poland before Communist, regimes were established there, but- the
credits involved were serviced by the successor Communist govern-
ments and they have. been paid. Also, in furtherance of avowed TT.S.
poi icy to assist Yugoslavia, we extended two large credits to Yugo-
slavia, one of $)0 million in 19)0 and another of $5) million in 1961.
A iso, we extended some credits to Poland. Acting as agent for the
Mutual Security Administration. We extended those credits with
the President's special fund.
-NI-Ts. KELLY. What year was that?
Ur. SAUER. There were three credits, 1957, 1.958, 1959, aggregat-
ing about $60 million. These transactions with Ymrosla via and Poland
were the only transactions that we had with Communist countries prior
to late 1963 and 1964. I might also say up unti11963 the Bank's charter
had no restrictions on our ability or capacity to deal with the U.S.S.R.
017 other Communist. count ries.
however, in the fall
KET.T.Y. No Bank restrictions?
SATTER. No Bank restrictions. No restrictions imposed by the
,flongress upon our authority to deal with the -U.S.S.R. We could have
tiln.de a, loan any time. to the U.S.S.R. under our statute or to any of the
other countries, but we had only done what T had indicated.
Ifoweyer, in 1963, in the late fall, there was much debate in Congress
about the proposed sale of wheat to Russia. It was mentioned that the
-Export-Import Bank wouldprobably have to finance such a transac-
tion if I -he U.S.S.R. was to buy any appreciable amount of wheat. The
same, thing in connection with the other Comm mist countries of East-
ern Europe.
The Congress adopted a rider to our approprlat ion in the fall of that
year to the effect that we were not to extend any credits or guarantees:
-that is. engage in financing trade with the U.S.S.R. or any of the other
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Communist countries of Europe unless the President found it to be in
the national interest so to do. I repeat that was in our appropriation
act. That provision has been contained in each subsequent appropria-
tion act, with the result that from that time on we could only do those
-things that the President might find to be in the national merest.
Following that legislation the President in February 1964 found it
to be in the national interest for the .Export-Import Bank to finance
the sale of agricultural products to the U.S.S.R. and the other Corninu-
nist countries. The only exception I believe was East Germany, with
which we had no relations.
Under that finding we financed wheat and corn to Rumania, about
$25 million worth, arid also about $5 million worth of feed grains to
Poland. However., the U.S.S.R. did not approach us for a credit and
we never made any.
Subsequently the President also found it to be in the national interest
to finance all types of products to Yugoslavia. This again was in fur-
therance of our policy to assist -Yugoslavia, with the result that the
Bank continued to assist Yugoslavia both in agriculture and in hard
goods.
Mr. FULTON. Wien was that?
Mr. SAUER. It was in February of 1961 also, Mr. Fulton, that, the
President made the finding with respect to Yugoslavia.
Mr. FULTON. 1964 or 1961?
Mr. SAI:ER. 1964. 1 said 1961; it. was 1964.
In June of 1964 the President made a second findinLt with respect
to Rumania. There, too, he found it to be in t he mit lona] hit erest for
the Bank to engage in financing the sale of all products. Following
that finding, we did finance a petroleum plant------1 say finance, we guar-
anteed credit by a commercial bank for a petroleum plant in Rumania.
That was about $20 million. This has been the extent of our activities
hi the countries involved.
Since the purpose of the Export-Import Bank is to finance the
foreign trade of the United States, and since it is tie Only Government
agency which has the authority to engage in such transactions with
the, countries involved, it is quite appropriate that the Bank be the
instrument for financing trade with Communist countries when the
President finds it io be in the nal ional interest to do so. On its part,
the Bank is quite prepared within. the statutory authority granted it
by flue Congress to carry out the, spirit of the President's determina-
tion of October 7 past t hat it is in the national interest for the Bank
to ein,age in short- and medium-term transact ions involving the sale
of all types of peaceful goods and service.s to Bulgaria, Czechoslavakia,
1 Iii ngarv, and Poland.
Mr. Ft:Errox. When, is that.? I cannot hear you.
Mr. SAFER. October 7,2 weeks ago.
Mr. FULTON. 131i-1,0-aria ?
Mr. SATTER. Yes. Also, Czechosl ayi a, Hungary, and Poland. In
other words, the President at that time made the same finding with
respect. to those four countries as he had previously made in the case of
Rumania and Yugoslavia; tl at is, covering all goods as distinguished
from merely
Mrs. Bouroy. Would it be at all proper for me to ask at this point--
yon say the President makes findings. Who made them?
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Mrs. KELLY. Mr. Sauer is our last witness, and as soon as he com-
pletes his statement, I will be delighted to call on you.
Mr. FuttroN. Could we have the amounts again, because I cannot
hear.
Mrs. KELLY. They appear in Mr. Sauer's statement.
1)o you want to ask anything else, Jim?
Mr. FutTais-. No; I just want to hear. If it is in the statement, that
is fine.
Mrs. KELLY. Thank you so much, Mr. Sauer.
We will now proceed with the questions. I have one or two. I
tiniterst ood Mr. Stoessel to say that the President thought that it was
necessary to improve relations with the East at this time because of
the problems wit Inn NATO and the United Nations. Is that a correct
interpretation of your statement, Mr. Stoessel ?
Mr. STOESSEL. Madam Chairman, no. What I meant to indicate
was that, one, there is obviously concern about NATO and the develop-
ments there. There is some questioning in some circles of our com-
mitment to Europe, to NATO. 1 think the President felt it was
desirable to reaffirm at this time our interest in a. strong NATO and our
commit ment to Enrope. le also, I feel, wanted to make clear that
we favor better relations with Eastern Europe, but on a basis of unity
in the West.
Mrs._ KELLY. Has any objection been voiced by any of the NATO
members to this new policy?
Mr. STOESSEL. Madam Chairman, I would first like to say, as Mr.
Greenwald has said, that we don't feel there has been a change in
pol icy. This is it continuation of earlier policy. There was, as you
recall, at the NATO meeting in the spring at Brussels a statement
in the communique of that meeting expressing the agreement of the
NATO powers that there should be further efforts to seek reconcilia-
tion with the East.
I think there is general agreement by all of the countries that this
is a desirable policy. We have had in the meetings of the various
committees in NATO since the Brussels meeting more discussion of
the role of NATO with regard to furthering fais reconciliation with
Eastern Europe.
I think there is a general consensus that NATO has a very valuable
role to play as a clearinghouse for ideas for making sure that the
individual actions of the NATO countries contribute to the overall aim.
There has been, I= would say, a problem with France. As you know,
we have our difficulties wit h. France on most of the things in NATO
these days, and this does not exclude this question of how we go about
improving relations with Eastern Europe and the Soviet Union.
The French are in favor of this, of course.
Mrs. KELLY. The French are in favor of this change in emphasis
in our policy: is that right.? What about Germany?
Mr. STOESSEL. They favor it. The French difference, I think, is with
regard to the role of NATO. They are. willing to discuss in NATO,
but they don't want a common line to be concerted into NATO. They
have made this quite clear.
They feel. that the best way to approach the East is on a bilateral
basis. They have made very clear that they do not favor a common
agreement on a given line.
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
Mrs. KELLY. What about Germany
Mr. STOESSEL. Germany is also is favor. Of course, Germany
Mrs. KELLY. Was this change in emphasis discussed with the NATO
countries prior to our taking this step?
Mr. STOESSEL. This was discussed at the Brussels meetings of NATO
in the spring, and there have been meetings since that time. On Ger-
many, with regard to her trade, of course, she is one of the leading
nations in trading with Eastern Europe and the Soviet Union. Trade
talks are now going on between West Germany and the Soviet Union.
With Rumania, Germany is the largest trading partner of Rumania
in the West. They favor this general policy.
Mrs. KELLY. I have one more question of the Department of Com-
merce before I ask other members to pose their questions. Is this
change in policy in lino with the recent changes in the NATO Cocom
list?
Mr. McNEILL. It is not a change in policy at all. It is simply a
continuation of policy. It is our policy within the Department of
Commerce on a continuing basis to review the list of products that
require validated licenses for export, to see whether products may be
removed from that list because they are basically of a peaceful nature.
Mrs. KELLY I realize that the trend toward a reduction of the
Cocom lists really started in 1954 or 1953. What I would like to
know, however, is whether the United States consulted with the other
NATO nations before deciding to remove those 300 or 400 items from
our export control list?
Mr. McNratz. Madam Chairman, we constantly review with our
Cocom partners--
Mrs. KELLY. I know you do. But this is quite a change, quite a
large change to be made at one time. now recently was this decision
made?
Mr. MCNEILL. None of the 400 items, to my knowledge, were in-
cluded on the Cocom list, which is the common list of strategic
products.
Mr. GREENWALD. Perhaps T could add one point of clari fication.
The United States has a longer list of items that we embargo than
Coc,om. The items on the U.S. list are not up to or down to, which-
ever way you want to put it, the international list.
Mrs. KELLY. The U.S. list
Mr. GREENWALD. IS Still longer.
Mrs. KELLY. I would like .to have for the record a listing of the
recent. changes in the Cocom lists. This could be submitted for the
record.
Could I also have our :U.S. export, control list for the record?
Mr. GREENWALD. I am just trying to see--I understand that the
changes in Cocom have been published by the Department of Com-
merce. I think Commerce Department can supply that.
Mrs. KELLY. I want it for the record.
I also want the difference between that list and the U.S. list.
MT. GREENWALD. I think the list itself
Mrs. KELLY. Arc I making myself clear? I hope I am.
I want a general comparison of the two lists.
Mr. MCNEILL. We can do that.
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
The Department subsequently supplied the following list of changes
in the U.S. commodity control list as a result of recent agreements
regarding changes in the list of international embargoed items:)
Arriken xtrivr A
Analysis of control status of entries on the Department of Commerce's commodity
control list regarding the free world and Eastern European destinations
[Numbers rounded to nearest hundred]
I. Total number .of separate entries 2, 800
2. Number of entries controlled internationally under validaled export
license requirement (controlled to virtually all destinations) 600
3. Number of other entries controlled to most destinations (excluding
Canada and, in selective instances. Latin American destinations)
under validated export license requirement 500
Number of entries on general license (I?T)EST to U.S.S.R. and other
Eastern European destinations iv:tibia ted export I icense not
required) 900
P. Number of entries controlled under validated export license to Eastern
European destinations but not to free world destination, 800
U. Total number of entries controlled no meet free world countries under
Validated export license requirement (total of lines 2 and 3 above) 1.100
7. Total number of entries controlled to Eastern European destinations
under validated export license requirement (total of lines 2. 3, and
3 above) 1, 900
S. Total number a entries under general license G-DEST to most free
world countries (total. or lines and 5 above) 1,700
includes over 400 items announced in CEB 941, of which most remain under validated
expert license requirement to the Soviet Zone of Germany.
2 Excludes over 400 items announced in CEB 941 which remain under validated export
license requirement to Soviet Zone of Germany.
[From Current Export Bulletin, No. 939, Aug. 30, 19601
Subject : Revision or Hie Commodity Coitt rot List (see. 399.1).
As a result of agreements reached in recent international consultations be-
tween the United States and certain friendly (Comm) foreign countries, the
following revisions are being made in the Commodity Control List- :
A. A Dour-nix or 'ft t NEBOL "-r
The symbol "A'' is added to the column headed "Special Provisions List"
for the commodities listed below, and effective Oefolier LI 190G, an Import
Cerlificate (or a [long Kong Import License) will he required in support of
an application for a ihqinse to export the commodities covered by these entries
to any of the countries specified in ? 373.2 of the Expert Regulations, Until
October 11-, 1990, applica (lois for licenses to export these commodities vil re-
ceive consideration for approval if supported by either a Form E(--842, Single
Triinsaetion Statement by Consignee and Purchaser, or by a Form FC-843.
Mnfiiple Transaction Statement by Consignee and. Pnrchaser, or hy an Eli-
nor- Certificate. After that date, however, only the Import certificate. be
ccepta ble.
EXTORT CONTROL COMM-old-Ty NT.T-NUSER AND Coat-NIODITY DESI iPTION
23120 Hydroxy terminated polybutadiene: and cyclized 1.2-polybutadiene.
33230 Lubricating- oils and greases, svid 'wile, which contain perfluoroalkyl
01: hers is the primiitial ing-redien(.
31202, 51201) Peril uoro-a lkyl ethers.
5120 Organic intermediates (other tlidn vinylidene fluoride) containing- 10
percent or more of combined fluorine, used in the manufacture of fluorinated
elastomeric products.
51470 Materials suitable for application in electromag-,netic devices making use
of the gyromagnetic resonance phenomenon.
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53332 Varnishes, finishes and enamels made of polyimides other than poly-
pyromellitimide, polyimidazo-pyrrolones, aromatic polya in ides, :Pict poly-
paraxylylenes.
58120 Polyimides other than polypyromellitimide, polyintidazo-pyrrolones,
aromatic polyamides, and polyparaxylyienes, 11(111 11 products thereof.
59999 Hydraulic fluids, formulated wholly or in part with perfluoro-alkyl
ethers.
65590 Textile tubing and hose Lined with or covered with polytetrafluoro-
ethylene or polychlorotrifluoroethylene.
66311 Diamond grinding wheels fabricated with polyimides (oilier than poly-
pyromellitimide), polybenzimidazolas, poi yimidazopyrrolones, aromatic poly-
amides, or polyparaxylylenes where the value of the contained polymeric sub-
stances is 50 percent or more of the total value of the nui ter Is used.
66494 Glass fiber optic plates specially designed optically for image intensifier
or image converter tubes.
66700 Materials suitable for application in electromagnetic: devices making use
of the gyromagnetic resonance phenomenon.
68120, 68310-68323 Magnetic materials containing platinum or nickel, having any
of the following characteristics : (a) grain oriented sheet or strip of a
thickness of 0.1 min. (0.004 inch) or loss, ( b) initial permeability 70,000
gauss-oersteds (0.0875 henry per meter) or over, (c) remanence 98.5 per-
cent or over of maximum flux for materials having magnetic permeability,
or (d) a composition capable of any energy product greater than 6 times 100
gauss-oersteds.
68931-68932 Magnesium base alloys containing 10 percent or more lithium.
68950 Magnetic materials containing cobalt or vanadium, having any of the
following characteristics : (a) grain oriented sheet or strip of a thickness of
0.1 mm. (0.004 inch) or less, (0) initial permeability 70,000 gauss-oersteds
(0.875 henry per meter) or over, (c) remanence 98.5 percent or over of maxi-
mum flux for materials having magnetic permeability, or (0 ) a composition
capable of an energy product greater than 6 times 10 gauss-oersteds.
68950 Lithium alloys containing 50 percent or more lithium.
6921.1-69299, 69891, 69892, 69899 Jacketed containers for the storage or trans-
portation of liquefied gases at temperatures below minus 274? F. (minus
170? C.) as follows : (a) all sizes having multi-laminar type insulation under
vacuum, and (b) having other insulating systems, with a liquid capacity of
250 to 500 gallons, specially designed for gases boiling below minus 328? F.
(minus 200? C.) and having an evaporation loss rate of less than 3 percent
per day.
711.42 Jet engines of 5,000 to 9,000 pounds thrust, turbo-prop and turbo-shaft
engines of 2,500 horsepower or more or with a residual thrust of 1,000 pounds
or more, and parts and accessories therefor.
71510 Gear grinding machines, generating type, capable of itecepting gear blanks
of 9 inches (228 min.) work diameter or more, for the production of helical or
herringbone gears.
71510 Machine tools designed for or equipped with open-loop or nonelectronic,
closed-loop numerical control systems specially designed for controlling coordi-
nated simultaneous (contouring and continuous path) machining movements iu
a machine tool in two or more axes.
71323 Flame cutting machines designed for or equipped with open-loop or non-
electronic closed-loop numerical control systems specially designed for control-
ling coordinated simultaneous (contouring and continuous path) machining
movements in a machine in two or more axes, and parts and accessories
therefor.
71.915 Cryogenic ref rigeration equipment consisting: of. or containing as com-
ponents thereof, jacketed containers for storage or transportation at tempera-
tures below minus 274? F. (minus 170? C.) with multi-laminar type insulation
under vacuum, and specially designed parts, 11.0.0.
71919 Processing vessels specially designed for chemically processing radii:-
active material ; and specially designed parts and accessories, n.e.e.
71919 Other machines and equipment, n.e.c., specially designed for use in proc-
essing of irradiated nuclear materials to isolate or recover fissionable ma-
terials ; and specially designed 'tarts and accessories, n.e.c.
71922 Compressors for jet, engines of 3,000 to 9,000 pounds thrust or for turbo-
prop or turbo-shaft engines of 2,500 horsepower or more or with a residual
thrust of 1,000 pounds or more; and parts therefor.
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71980 Nonautomatic equipment for the manufacture of semi-conductor devices;
and parts and accessories therefor.
71980 Nuclear reactor fuel chopping, disassembling, or dejacketing machines;
and specially designed parts and accessories, n.e.c.
71980 Machinery specially designed for the extrusion of polytetrafluoroethylene
coagulated dispersions, or powders or pastes derived therefrom; and specially
designed parts and accessories, n.e.c.
71994 Gaskets (joints) made of polyimides other than polypyromellitimide,
polyimidazopyrrolones, aromatic polyamides, or polyparaxylylenes where the
value of the contained polymeric substances is 50 percent or more of the total
value of the gasket.
72310 Submarine cable and cable containing fluorocarbon polymers or copoly-
mers, having a diameter of 0.9 mm.
72310 Communications cable having a diameter of 0.9 mm. (0.035 inch) or less,
as follows; (a) submarine cable, or (b) cable containing fluorocarbon polymers
or copolymers.
72320 Electrical insulators and fittings made of polyimides other than poly-
pyromellitimide, polyimidazopyrrolones, aromatic polyamides, or polyparaxyl-
ylenes where the value of the contained polymeric substance is 50 percent or
more of the total value of the article.
72199 Electronic equipment, n.e.c., containing' one or more functional circuits,
including integrated circuits, with a component density greater than 75 parts
per cubic inch (4.575 parts per cubic centimeter) ; and specially designed cir-
cuit assemblies, subassemblies and parts.
72030 Photomultiplier tubes having an anode pulse rise time of less than 2
nanoseconds.
72930 Cold cathode tubes, whether gas filled or not, operating in a manner simi-
lar to a spark gap, containing three or more electrodes and having all of the
following characteristics: (a) rated for an anode peak voltage of 2,500 volts
or more, (b) rated for peak currents of 30() amperes or more, (c) an anode
delay time of 10 microseconds or less, and (d) an envelope diameter of less
than 1 inch (25.4 mm.).
72052 Magnetometers which use general purpose Hall field probes to measure
magnetic fields greater than one oersted, using control current between 100
and 400 milliamperes.
72952 Instruments designed for testing or calibrating the following equipment:
(a) types of compasses and gyroscopie equipment, Export Control Commodity
Nos. 72952 and 86191, which are subject to the Import Certificate/Delivery
'Certification procedure, (b) aircraft integrated flight instrument systems
which include gyro-stabilizers and/or automatic pilots, (e) gyro-stabilizers
other than those for aircraft control or for stabilizing an entire surface vessel,
(d) automatic pilols other than those for aircraft or surface vessels, (e) astro
compasses, (f) star trackers, and (g) accelerometers designed for use in iner-
tial navigation systems or in guidance systems.
72952 Measuring and controlling instruments and apparatus containing crystals
having spinet, hexagonal or garnet crystal structures, or containing thin film
devices, as follows: (a) single aperture forms having (1) a switching speed of
0.5 microsecond or less at the minimum field strength required for switching
at 40?C. (104?F.), or (ii) a maximum dimension less than 45 mils (1.14 mm.),
h) multi-aperture forms having (i) a switching speed of 1 microsecond or
lass at the minimum field strength required for switching at 40?C. (104?F.),
( ii) a maximum dimension less than 100 mils (2.51 mm.), or (iii) having _10
or more apertures, or (c) thin film memory storage or switching devices.
72052 Open-loop or nonelectronic closed-loop numerical control systems spe-
cially designed for controlling coordinated simultaneous (contouring and con-
tinuous path) machining movements in a machine tool in two or more axes.
72952 Combination balancing and correcting machines designed for or equipped
with open-loop or nonelectronic closed-loop numerical control systems specially
designed for controlling coordinated simultaneous (contouring and continuous
path) movements in two or more axes.
72952 Numerical control servo-driven measuring or gauging machines specially
designed for measuring at any point of the contour the dimensional shape and
contour characteristics of two- or three-dimensional objects, including objects
of revolution.
72952 Magnetometers which use general purpose Hall field probes to measure
magnetic fields greater than one oersted, using control current between 100
and 400 milliamperes.
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72991 Permanent magnets having initial permeability 70,000 oersteds (0.0875
henry per meter) or over.
73105, 73163, 73202, 73203, 73205 and 73300 Jacketed containers suitable for
transport by rail, road, and ship, and railway cars, motor vehicles, trailers and
other vehicles equipped with jacketed containers, for the transportation of
liquefied gases at temperatures below minus 174?F. (minus 170?C.), as fol-
lows: (a) all sizes having multi-laminar type insulation under vacuum, (b)
having other insulating systems, with a liquid capacity of 250 to 500 gallons,
specially designed for gases boiling below minus 328?F. (minus 200?C.) and
having an evaporation loss rate of less than 3 percent per day, or (c) having
other insulating systems, designed only for liquid oxygen, nitrogen or argon
and having a capacity in excess of 1,200 gallons (1,542 liters), with an evapora-
tion loss rate of less than 1.5 percent per day.
73410 Nonmilitary helicopters as follows: (a) over 10,000 pounds empty weight,
or (b) 10,000 pounds or less empty weight of types which have been in normal
civil use for one year or less, except piston engine powered.
73410 Nonmilitary aircraft under 00,000 pounds empty weight of types which
have been in normal civil use for one year or less.
73492 Power transmission systems, rotors and rotor blades, and other parts and
accessories specially designed for nonmilitary helicopters: (a) over 10,000
pounds empty weight, and (b) 10,000 pounds or less empty weight of types
which have been in normal civil use for one year or less, except piston engine
powered.
73492 Landing gear assemblies and parts therefor as follows: (a) for aircraft
under 90,000 pounds empty weight of types which have been in normal civil
use for one year or less, and (b) for helicopters 10,000 pounds or less empty
weight of types which have been in normal civil use for one year or less,
except piston engine powered
86140 Cameras specially designed for: (a) use in the manufacture of masks for
semiconductor devices, integrated circuits, and similar electronic equipment
and components, or (b) the creation of a photosensitive pattern on the sur-
face of a semiconductor insulating snb,strate; and specially designed parts and
accessories.
86140 Parts and accessories specially designed for photographic micro-flash
equipment capable of giving a flash of 1/200,000 second or shorter duration at
a minimum recurrence frequency of 200 flashes per second.
86199 Parts and accessories specially designed for open-loop or nonelectronic
closed-loop numerical control systems specially designed for controlling co-
ordinated simultaneous (contouring and continuous path) machining move-
ments in a machine tool in two or more axes.
89300 Manufacturers, ine.c., of polyimides (other than polypyromellitimide and
polybenzimidazole), polyimidazopyrrolones, aromatic polyamides, or polypar-
axylylenes where the value of the contained polymeric substances is 50 percent
or more of the total value of the materials used.
B. DELETION Or TIIE SYMBOL "A"
Effective August 30, 1966, the symbol "A" is deleted from the column headed
"Special Provisions List" for the commodities listed below. This indicates that
on and after that date, an Import Certificate is no longer required in support of
an application for a license to export the commodities covered by these entries
to the countries specified in ? 373.2 of the Export Regulations. Such applica-
tions must be supported by a Statement by the Consignee and Purchaser, Form
FC,-842 or Farm EC-843. On and after August 30, 1966, an import Certificate
will not be acceptable instead of the reqUired Statement by the Consignee and
Purchaser regardless of whether the destination is listed in ? 373.2 of the Export
Regulations.
EXPORT CONTROL COMMODITY NUMBER AND COMMODITY DESCRIPTION
27698 Lithium ores and concentrates (for example, ambligonite, lepidolite and
petalite).
28393 Tantalum ores and concentrates.
28398 Columbian or niobium ores and concentrates.
33250 Halogenated silicone fluids, except fluorinated silicone fluids and chlor-
inated silicone fluids.
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33250, 33291 Lubricating oils, greases, and hydraulic flUids, petroleum based,
which are or which contain as the principal ingredients petroleum (mineral)
oils which have a pour point of minus 30? F. (minus 34? C.) or lower, and
are thermally stable at plus 700? F. (plus 371? C.), but which have a viscosity
index (VI) of less than 75.
51209 Diethylene triamine of a purity less than 90 percent.
51209 Lithium salts of organic compounds which have not been enriched with
respect to the lithium-6 isotope.
51209 Boric acid esters.
51338 Fluoroboric acid, all concentrations.
51369 Lithium oxides and hydroxides which have not been enriched with re-
spect to the lithium-6 isotope.
51309 Oxide, hydroxides and peroxides of tantalum, niobium (columbium), or
tantalum-niobium containing less than 20 percent of tantalum or niobium.
51460 Potassium -fluoroborates ; and sodium fluoroborates.
51470 Boron trichloride and its complexes.
51470 Ammonium fiuorohorate.
51470 Hydrogen peroxide in concentrations of 66 percent up to but, not includ-
ing 80 percent.
51470 Lithium compounds, including catalysts which have not been enriched
with respect to the lithium-6 isotope, except hydrides in which lithium, is
compounded with hydrogen or complexed with other metals or aluminum
hydride.
51470 Compounds of tantalum. niobium (columbium) or tantalum-niobium con-
training less than 20 percent of tantalum or niobium.
51500 Compounds enriched in lithium 7 isotopes.
53332 Finishes, enamels, and dispersions wholly made of polyvinyl fluoride.
53335 Pastes wholly made of polyvinyl fluoride.
58110 Untensilized and unmetallized polyester film with a thickness of 0.00035
inch (0.009 mm.) up to and including- 0.0007 inch (0.018 min.).
58172() Polyvinyl fluoride resin and products.
51)1 T( Adhesives or cements wholly made of polyvinyl fluoride.
59b99 Hydraulic fl aids which are or which contain as the principal ingredients
petroleum (mineral) oils and haring all of the following characteristics: (a) a
pour point of minus 30? F. (minus 34? C.) or lower, (b) a viscosity index of less
I ham 75, and (c) are thermally stable at fans 700? F. (plus 371' C.).
62988 Packing- materials and other articles, n.e.c., wholly made of polyvinyl
fluoride.
66311 Diamond grinding Wheels fabricated with polypyromellif imide where the
value of the contained polymeric substance is less than 50 percent of the
)1-al vnlue of the wheel.
66700 Quartz crystals, natural and synthetic, unworked or worked, not mounted,
radio grade.
37160 Ferroboron ferrocolumbium ; ferrotantalum ; and ferrocolumbium-
tintalum.
6721:1 -67930 Alio v steel ingots and other primary forms, ba is, rods, angles,
shapes and sections, plates and sheets, hoop and strip, wire, tubes and pipes,
castings and forgings presently designated as "Special Types Class 1" hut
which do not meet the following specifications: steels produced by a vacuum
melting; process which have it total content of alloying elements of more than
1(1 percent and a carbon content not exceeding 0.2 percent and which have
been or ire eapable of being heat treated to give a yield strength of 180,000
pis or higher.
69110 Alloy steel roofing sheets. siding- sheets and perforated sheets, presently
designated as "Special Types Class 1" but which do not meet the following
specifteations : steels produced by a vacuum melting process which have a total
content of alloying elements of more- than 10 pereent and a carbon content
not exceeding, 0.2 percent and which have been or are capable of being heat
treated to give a yield strength of 150.000 nsi or higher.
69211-69299 .Ta cliel ed cont.') incus, with other I ban multi-la mina r insulating
systems, for the storage or transportation of liquified gases as follows: (a)
for gases boiling below minus 328? F. (minus 200? C.) with loss rate in excess
of 3 percent per day. or HO fixed (stationary) storage tanks designed only
fer liquid oxygen, nitrogen or argon, having a capacity less than 500 tons, or
tel mobile units designed only for liquid oxygen, nitrogen or argon, having
capacity less than 1.200 gallons. or (d) mobile units designed oaf y for liquid
cocygon. nitrogen or argon, having a capacity in exceds of 1.200 gallons and with
an evaporation loss rate greater than 1.5 percent per day (21 hours).
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69887 Alloy steel welding rods and wire presently designated as "Special Types
Class 1" but which do not meet the following specifications: steels produced
by a vacuum melting process which have a total content of alloying elements
of more than 10 percent and a carbon content not exceeding 0.2 percent and
Which have been or are capable of being heat treated to give a yield strength of
180,000 psi or higher.
69891, 69892, 69899 Jacketed containers with other than multi-laminar in-
sulating systems, for the storage or transportation of liquefied gases as follows:
(a) for gases boiling below minus 328? F. (minus 200? C.) with loss rate in
excess of 3 percent per day, or (b) fixed (stationary) storage tanks designed
only for liquid oxygen, nitrogen or argon, having a capacity less than 500
tons, or (c) mobile units designed only for liquid oxygen, nitrogen or argon,
having a capacity less than 1,200 gallons, or (d) mobile units designed only
for liquid oxygen, nitrogen or argon, having a capcity in excess of 1,200 gal-
lons and with an evaporation loss rate greater than 1.5 percent per day (24
hours).
71150 Diesel engines, non-magnetic, 50 brake horsepower and over, having a,
non-magnetic content exceeding 50 percent up to but not exceeding 65 percent
of total weight, and parts and accessories therefor.
71430, 71492 Flexowriters (f(;) specially designed for use with electronic com-
puters, and parts and accessories therefor.
71510 Gear making and/or finishing machinery capable of the production of
gears of a module finer than 0.5 mm. (diametral pitch finer than 48) but which
are not capable of meeting a quality standard better than AGMA. 10 or
equivalent.
71510 Grinding machines designed for the utilization of spindle heads capable
of speeds in excess of 1.20,000 r.p.m. which ore capable of use only as hand-
held tools.
71019 Equipment specially designed for the production of liquid hydrogen and.
producing 1 ton but less than 11/, tons per day of gas in liquid form, other than.
equipment for plants capable of producing more than 25 percent of their total
daily products as extractable gas in liquid form ; and parts therefor.
71919 Equipment for the production of liquid helium where such equipment;
has a capacity of no more than 20 liters per hour ; and parts therefor.
71921 Pump parts and attachments wholly made of polyvinyl fluoride.
71992 Centrifugal and_ axial now compressors and blowers capable of: (a) an
oven hi compression ratio of 2 :1 or more collided xvith a capacity of over 372,000
cubic feet per minimi i', or ( all overall compression ratio of 3 :1 or more
coupled with a capacity of over 1(16,000 cubic feet per minute or more; and
specially designed parts alit) accessories, ite.c.
71954 Spindle heads eapable of speeds in excess of 120,00(1 r.11.111. which are
capable of use only with hand-held tools.
71980 Equipment. specially designed to produce electronic assemblies by : (a)
an in 'an(1/or soldering comtionents on insulating panels,
plates. or wafer:4 to which wiring is applied by printing or other means, or
(b) automatically or :seinizintomal ically assembling wiring and/or packaging
mounted modular insulated panels. plates, or wafers ; and parts and accessories
therefor.
71992 -Valves, cocks or pressure regulators of 2-inch diameter (50.8 mm.) or
specially designed for operation at temperatures, :from minus 274?F.
(minus 17(1?C.) to minus 328?F. (millUS 200?C.).
71992 Valve parts and 'accessories wholly made of polyvinyl fluoride.
71994 Ga skets wholly made of polyvinyl fluoride ; a lid gaskets made of poly-.
pyromellitimide or polybenzimidazole where the value of the contained poly-
merle .substances is less than 50 percent of the total value of the gasket.
72210 Synchronous motors as follows : (a) or size 30 (3 inches in diameter)
and smaller having synchronous speeds over 3,000 rpm up to but not including
3,600 rpm, or (b) designed to operate within a 'temperature range greater than.
minus 10?C. (plus 14?F.) to plus 55?C. (plus 131?F.) but not exceeding minus
25?C. (minus 13? F.) to his 100?C. (plus 212?F.).
72210 Servo motors (gear head or plain) designed to operate from power sources
over 200 cycles per second up to and not exceeding ,1.00 cycles per second,
designed to operate within a temperature range greater than minus 10?C.
( plus 1.4?F.) to plus 5I5?C. (plus 131?F.) but not exceeding minus 25?C, (minus
13?F.) to plus 1.00?C. (plus 212?F.) ; and specially designed parts and ac-
cessories. n.e.e.
72310 Wire and cable coated with or insulated with polyvinyl fluoride.
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24. RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
72310 Communications cable containing more than one pair of conductors of
which any one of the conductors, single or stranded, has a diameter 0.9 mm.
0.035 inch) and in which the nominal mutual capacitance of paired circuits
is less than 53 nanofarads/mile.
72320 Electrical insulators and fittings as follows: (a) whally made of poly-
vinyl fluoride, or (b) made of polypyromellitimide or polybenzimidazole where
he value of the contained polymeric substances is less than 50 percent of the
total value of the item.
72491 Equipment designed to ensure the privacy or secrecy of analog and/or
+tig-Ital communications as follows: (a) standard commercial facsimile or video
systems employing only transposition of analog information, and (b) indus-
trial and commercial video systems for pay television and similar restricted
audience television in which privacy is obtained by the use of non-standard
sweep systems and not employing digital techniques to modify an analog
transmission; and specialized components, assemblies, subassemblies, parts, and
accessories therefor.
72599 Radio transmitters or transceivers including transmitter amplifiers, de-
signed to operate at output carrier frequencies between 108 and 156 megacycles
and not having other characteristics subject to the Import Certificate/Delivery
Verification procedure.
72191) Radio relay communications equipment designed for use at frequencies of
300 megacycles but not exceeding 470 megacycles, except equipment having
any of the following characteristics: (a) a power output exceeding 5 watts, (b)
a base bandwith greater than 150 kilocycle.s, or (c) for other than fixed service.
72599 Equipment, designed to ensure the privacy or secrecy of analog and/or
digital communications as follows : (a) standard commercial facsimile or
video systems employing only transposition of analog information, and (b)
industrial and commercial video systems for pay television and similar re-
stricted audience television in which privacy is obtained by the use of non-
standard sweep systems and net employing- digital transmission or digital
techniques to modify an analog transmission ; and specialized components,
assemblies, subassemblies, parts, and accessories therefor.
72199 Panoramic adaptors for commercial receivers which are limited to search-
lug a spectrum of not more than plus or minus 20 iaercent of the intermediate
frequency of the receiver or plus or minus 2 megacycles.
72499 Ground and marine radar equipment, including specialized training or
simulating equipment, having a peak output power over 100 but not over 160
Iiiowatts and not lut ving other characteristics subject to the Impart Certificate/
tel ivory Verification procedure.
72912 Electrically richargeable starage cells, hermigically s-aled, designed to
have a leakage rate of 10 cubic centimeters per second of gas or less when
ested under pressure differential of 2 atmospheres ; and specialized parts,
-components and subassemblies therefor.
72930 Hydrogen thyratrons, except those (a) rated for a peak pulse power of
2 megawatts or more, or (b) of metal-ceramic construction,
72930 Fixed frequency pulsed magnetrons designed to operate at frequencies
from 9.300 to 9.345 or from 9.405 to 9.500 g-egacycles per second, with a maxi-
mum peak output power not greater than 25 kilowatts.
72930 Power diodes in which the rated forward current per junction under
continuous operation exceeds 200 amperes and the rated nut ximum recurrent
reverse voltage does not exceed 1,300 volts per junction.
72930 Transistors arid related devices using germanium as the bulk semicon-
ductor material, except the following:(a) having an average 1T of 40 to 240
megacycles and designed to have an maximum collector dissipation greater
than 150 milliwatts, or (b) an average 'T greater than 240 megacycles.
72930 Transistors and related devices using silicon as the bulk semiconductor
material, except the following: (a) an average fT 9f up to 500 kilocycles and
designed to have a maximum collector dissipation greater than 5 watts. (b)
an average 'T from greater than 500 kilocycles to 3 megacycles and designed
to have a maximum collector dissipation greater than 500 milliwatts, (e) an
average fT front greater than 3 megacycles to 20 megacycles and designed to
have a collector dissipation greater than 250 milliwatts, (d) an average 'T
greater than 20 megacycles, (e) majority carrier devices, including but not
limited to field effect transistors and metal oxide semiconductor transistors, or
f) a modulus of the current gain in the common emitter configuration of 10
or more for collector currents of 100 microamperes or less.
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS 25
72952 Cathode ray oscilloscopes possessing any of the following characteristics:
(a) an amplifier bandwidth greater than 20 but not greater than 30 megacycles
per second, (b) a time base shorter than 40 but not shorter 30 nanoseconds per
centimeter, or (c) employing accelerating potentials in excess of 5 but not
in excess of 10 kilovolts.
72952 Dosimeters and dose rate meters specially designed for use in food
processing Or plastic processing.
72952 Gear testers designed for the testing of gears of diametral pitch finer
than 48.
72952 Testing devices specially designed for testing electronic assemblies
produced by: (a) automatically inserting and/or soldering components on
insulating panels, plates, or wafers to which wiring is applied by printing
or other means, or (b) automatically or semiautomatically assembling, wiring,
and/or packaging mounted modular insulated panels, plates, or wafers.
72992 Laboratory size furnaces as follows: (a) furnaces for heat treatment,
up to 600 cubic centimeters, designed for temperatures not higher than 2700?C.
(4860?F.), and (b) melting furnaces up to 3,200 cubic centimeters, designed
for temperatures not higher than 2300?C. (4172?F.).
72992 Electric arc devices of less than 80 kilowatts which utilize or generate a
flow of ionized gas for cutting, welding, plating and/or spraying; equipment
incorporating such devices; and specially designed parts, accessories and
controls, n.e.c.
72995 Sintered electrolytic tantalum capacitors having a casing made of
epoxy resin or sealed with epoxy resin; and specially designed parts.
72998 Quartz crystals, except: (a) specially designed crystals or (18SGMhHes
for use as filters, and (b) those for use as oscillators as follows: (1) designed
for operation over a temperature range wider than 70?C., (ii) designed for a
frequency stability of plus or minus 0.003 percent or better over the rated
temperature range, (iii) mounted in glass holders, (iv) mounted in thermo-
compression welded metal holders, or (v) capable, when, mounted, of being
passed through, a circular hole with a diameter of 0.42 inches (10.7 mill.).
72999 Synchros and resolvers having a rated electrical error from 0.25 to 0.5
percent of maximum output voltage.
73105, 73163, 73202, 73203, 73205 and 73300 Jacketed containers suitable for
transport by rail, road, and ship, and railway cars, motor vehicles, trailers and
other vehicles equipped with jacketed containers for the transportation of
liquefied gases where such containers have other than multilaminar insulat-
ing systems and a loss rate in excess of 3 percent per day.
73410 Nonmilitary aircraft, 90,000 pounds or over empty weight, which have
been in normal civil use for over one year.
73492 Aircraft landing gear for nonmilitary aircraft 90,000 pounds or over
empty weight which have been in normal civil use for over one year.
73492 Other parts and accessories for nonmilitary aircraft 90,000 pounds or
over empty weight which have been in normal civil use for over one year.
86111 Quartz crystals, radio grade only.
86140 Photographic micro-flash equipment capable of giving a flash of between.
1/100,000 and 1/200,000 second duration, at a minimum recurrence frequency of
200 flashes per second.
86195 Testing devices specially designed for testing electronic assemblies
produced by (a) automatically inserting and/or soldering components on
insulating panels, plates, or wafers to which wiring is applied by printing or
other means, or (b) automatically or semi-automatically assembling, wiring,
and/or packaging mounted modular insulated panels, plates, or wafers.
86199 Instrument parts and accessories wholly made of polyvinyl fluoride.
86199 Amplifiers, electronic or magnetic, designed for use with resolvers as fol-
lows: (a) isolation types having a variation of gain constant (linearity of gain)
better than 0.5 percent and not less than -0.2 percent, or (b) summing types
having a variation of gain constant linearity of gain) or an accuracy of summa-
tion of better than 0.5 percent and not less than 0.2 percent.
89300 Pressure sensitive polyester tape of untensilized and unmetallized film
with a thickness .00035 up to and including .0007 inch.
89300 Manufactures, n.e.c., of polypyromellitimide or polybenzimidazole where
the value of the contained polymeric substances is less than 50 percent of the
total value of the manufactured commodity.
89300 Manufactured products, n.e.c., wholly made of polyvinyl fluoride.
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26 RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
C. VALIDATED LICENSE REQUIRED FOR ADDITIONAL COUNTRY GROUPS
Effective September 0, 1966, a validated export license is required to export
the commodities listed below to the additional destinations specified below. In
01t1'11 case, a footnote is provided to indicate the additional Country Groups for
which is validated export license will be required.
Shipments of commodities removed from general license as a result of changes
set forth below which were on dock for lading, on lighter, laden aboard an ex-
porting carrier. or in transit to a port of exit pursuant to actual orders for export
prior to 12:01 a.m.. September 0, 1966, may be exported under the previous gen-
eral license provisions up to and including September 29, 1966. Any such ship-
ment not laden aboard the exporting carrier on or before September 29, 1966,
EXPORT CONTROL CO M M OD ITY- NUMBER AND COMMODITY DESCRIPTION
23120 Hydroxyl_ terminated polybuladiene; and eyelized polybutadiene.'
33250 Lubricating oils and greases, synthetic, whicil are or which contain per-
iluoro-00 lkyl ethers as the principal ingredient!.
51202, 51.209 Perfinoro-alkyl ethers.'
51209 Organic intermediates (other Dian vinylidene -fluoride) containing 10
percent or more of combined fluorine. used in the manufaet tire of fluorinated
pia stomeric products.'
51-170 Materials suitable for appliaction in electromagnetic devices making use
-if the gyromagnetie resonance phenomenon.'
53332 Varnishes. finishes and enamels made of polyimides other than polypyro-
mellitimide, polyimidazo-pyrrolones, aromatic polyamides, and polyparaxy-
ly
58120 Polyimides other than pol?;pyromellitimide, polyimidazopyrrolones, aro-
matic polyamides, and polyparaxylylenes, and products thereof.'
59999 Hydraulic fluids, formulated wholly or in part with perfluoro-alkyl ethers.2
06311 Diamond grinding wheels fabricated with pclyimides (other than poly-
pyromellitimides ), polybenzimidazoles, polyimidazo-pyrrolones, aromatic poly-
:unities, or polyparaxylylenes where the value of the contained polymeric sub-
sLinees is 5() percent or more of the total value of the materials used.'
66-191 Glass fiber optic plates specially designed optically for image intensifier
.01- image converter tubes.'
66700 Materials suitable -for application in electromagnetic devices making use
if the gyrom gnetic resonance phen omen on.'
68120 Magnetic materials containing platnium, having any of the characteris-
tics set forth in Footnote 5.45
68110-68323 Magnetic materials containing nickel, having any of the ehar-
acteristics set forth in Footnote 5.22
68931-68932 Magnesium base alloys containing 10 percent or more lithium.'
68950 Magnetic materials containing cobalt, having any of the characteristics
set forth in Footnote 5.25
68950 Magnetic materials containing vanadium, having any of the character-
istics set forth in Footnote
68950 Lithium alloys containing 50 percent or more lithium..
71510 Gear grinding machines, generating type, capable of accepting gear blanks
of 9 inches (228 mm.) work diameter or more, for the production of helical or
herringbone gears!
71510 Machine tools designed for or equipped with open-loop or nonelectronic
closed-loop numerical control systems specially designed for controlling coordi-
nated simultaneous (contouring and continuous path) machining movements in
a machine tool in two or more axes!
1 Effective September 6. 1966, a validated license is required for export of this com-
modity to Country Groups T. V. and W.
Effective September 6, 1966. a validated license is required for export of this com-
modity to Country Groups T and V.
3 Effective September 6. 1966, a validated license is required for export of this commodity
to Country Groups T, V. W. X and V.
4 Effective September 6. 1966, a validated license is required for export of this commodity
to Country Groups T, V. W, and X.
5 3,1agnetic materials having any of the following characteristics: (a) grain oriented
sheet or strip of a thickness of 0.1 mm. (0.004 inch) or less, ()) initial permeability 70.000
gauss-oersteds (0.0175 henry per meter) or over, (c) remanence 91.5 percent or over of
maximum flux for materials having magnetic permeability, or (d) a composition capable
of an energy product greater than 6 times 10. gauss-oersteds.
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS 27
71523 Flame cutting machines designed for or equipped with open-loop or non-
electronic closed-loop numerical control systems specially designed for con-
trolling coordinated simultaneous (contouring and continuous path) machine.
movements in a machine in two or more axes, and parts and accessories
therefor.'
71919 Processing vessels specially designed for chemically processing radio-
active material; and specially designed parts and accessories, n.e.c."
71919 Other machines and equipment, n.e.c., specially designed for use in
processing of irradiated nuclear materials to isolate or recover fissionable
materials; and specially designed parts and accessories, n.e.c."
71980 Nuclear reactor fuel chopping, disassembling, or dejacketing machines ;
and specially designed parts and accessories, n.e.c."
71980 Machinery specially designed for the extrusion of polytetrafluorethylene
coagulated dispersions, or powders or pastes derived therefrom ; and specially
designed parts and accessories, n.e.c."
71994 Gaskets (joints) made of polyimides other than polypyromellitimide,
polyimidazo-pyrrolones, aromatic polyamides, or polyparaxylylenes where the
value of the contained polymeric substances is 50 percent or more of the total
value of the gasket.'
72320 Electrical insulators and fitting made of polyimides other than poly-
pyromellitimide, polyimidazo-pyrrolones, aromatic polyamides, or polypar-
axylylenes where the value of the contained polymeric substances is 50 percent.
or more of the total value of the article,'
72499 Electronic equipment, 11.e.c., containing one or more functional circuits,.
including integrated circuits, with a component density greater than 75 parts
per cubic inch (4.575 parts per cubic centimeter) ; and specially designed cir-
cuit assemblies, subassemblies and parts.'
72930 Photomultiplier tubes having an anode pulse rise time of less than 2
nanoseconds.'
72952 Magnetometers which use general purpose Hall field probes to measure
magnetic fields greater than one oersted, using control current between 100
and 400 milliamperes.'
72952 Instruments designed for testing or calibrating the following equipment:
(a) types of compasses and gyroscopic equipment, Export Control Com-
modity Nos. 72952 and 80191, which are subject to the Import Certificate/
Delivery Verification procedure, (b) aircraft integrated flight instrument,
systems which include gyro-stabilizers and/or automatic pilots, (c) gyro-
stabilizers other than those for aircraft control or for stabilizing an entire
surface vessel, (d) automatic pilots other than those for aircraft or surface
vessels, (e) ?astro compasses, (f) star trackers, and (g) accelerometers de--
signed for use in inertial navigation systems or in guidance systems.'
72952 Measuring and controlling instruments and apparatus containing crys-
tals having spinel, hexagonal or garnet crystal structures, or containing thin
film devices, as follows: (a) single aperture forms having (i) a switching
speed of 0.5 microsecond or less at the minimum field strength required for
switching at 40?C. (104?F.), or (ii) a maximum dimension less than 45 mils
?(1.14 mm.), (b) multi-aperture forms having (i) a switching speed of 1
microsecond or less at the minimum field strength required for switching at
40?C. (104?F.), (ii) a maximum dimension less than 100 mils (2.54 mm.), or
(iii) having 10 or more apertures, or (c) thin film memory storage or switching
devices.'
72952 Open-loop or nonelectronic Closed-loop numerical control systems
specially designed for controlling coordinated simultaneous (contouring and
continuous path) machine movements in a machine tool in two or more
axes.'
72952 Combination balancing and correcting machines designed for or equipped
with open-loop or nonelectronic closed-loop numerical control systems specially
designed for controlling coordinated simultaneous (contouring and continuous
path) movements in two or more axes.'
1 Effective September 6, 1966, a validated license is required for export of this commodity
to Country Groups T, V. and W.
2 Effective September 6, 1966, a validated license is required for export of this commodity
to Country Groups T and V.
4 Effective September 6, 1966, a validated license is required for export of this commodity
to Country Groups T, V. W, and X.
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72952 Numerical control servo-driven measuring or gauging machines specially
Uesigned for measuring at any point of the contour the dimensional shape
and contour characteristics of two- or three-dimensional objects, including ob-
jects of revolution.'
72991 Permanent magnets having initial permeability 70,000 oersteds (0.0875
henry per meter) or over.'
86140 Cameras specially designed for: (a) use in the manufacture of masks
for semiconductor devices, integrated circuits, and similar electronic equip-
ment and components, or (b) the creation of a photosensitive pattern on the
surface of a semiconductor insulating substrate; and specially designed parts
and accessories.'
86110 Parts and accessories specially design(' for photographic micro-flash
equipment capable of giving a flash of 1/200,000 second or shorter duration at
a minimum recurrence frequency of 200 flashes per second.'
86199 Parts and accessories specially designed for open-loop or nonelectric
closed-loop numerical control systems specially designed for controlling co-
ordinated simultaneous (contouring and continuous path) machining move-
ments in a machine tool in two or more axes.'
89300 Manufactures, n.e.c., of polyimides (other than polypyromellitimide and
polybenzimidazole), polyimiclazo-pyrrolones, aromatic polyamides, or poly-
paraxylylenes where the value of the contained polymeric substances is 50 per-
cent or more of the total value of the material used.'
REPRINT PAGES
Accordingly, the Export Regulations are amended as set forth above. Re-
print pages for the Comprehensive Export Schedule setting forth these changes
will be incorporated into a forthcoming Current Export Bulletin.
n.AUER H. MEYER,
Director, Office of Export Control.
Mrs. KELLY. Mrs. Bolton.
Mrs. BOLTON. Thank you for letting me go before the members of
the subcommittee, because I am kind of ex officio.
want very much to know who determines all this business for
the President. What groups sit down together and decide what is
war material and what is peace material? We have just had a thing
in the House that is, I think, exceedingly serious. The veterinarians
wanted to have all the restrictions taken off the antibiotics that they
were feeding to animals. Those antibiotics are eaten by the animals
and are fed to humans. Some are poison to humans but the Congress
just swept along on it. That is the kind of thing that I think you
people are doing to a great degree.
You always say "the President finds." All right, we know in the
committee for years and years we were told that once that word "finds"
was used, we couldn't change anything. Oscar Cox was a little too
smart for us. When we found out about it we couldn't change it.
ME. F17LTON. What word?
Mrs. BOLTO1c. You know, "deems" and "finds." Years and years
of that we had.
May I ask you questions of this nature? Why are we helping
finance the Fiat auto plant in Russia? Why don't the Italians do
that? It is their plant, isn't it?
Mr. SAuEn. I will give you the facts as the Bank knows them. We
are not extending a credit to the Russians. The Italians are financing
the plant.
MES. BOLTON. With Our money?
1 Effective September 6, 1906, a validated license Is required for export of this commodity
to Country Groups T. V, and W.
4 Effective September 6. 1966, a validated license is required for export of this commodity
to Country Groups T, V. W, and X.
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Mr. SAUER. We are extending?proposing to extend a credit up to
e$50 million to the Italian Government to enable Fiat, an Italian
,corporation, to buy machine tools in the United States.
Mrs. BouroN. So we are financing?thanks for correcting my pro-.
,nounciation----the Fiat plant to the extent of the tools?
Mr. McNiat,L. May I interrupt, here, please? it is my understand-
ing, Mrs. Bolton, that the Italians will be supplying several hundred
million dollars worth of credit for the construction in the Soviet Union
?of the Fiat plant.
What Mr. Sauer is referring to is but a relatively small portion of
this which will result in the utilization of American machine tools by
Fiat Italy. We are not in any manner supplying the total credit. It
is just a small part of the total credit.
Mrs. BOLTON. Then I would like to ask you ?
Mr. ,ATONA GAN. What was t he amount. of that, please'?
Mr. SATTER. We are being asked to finance up to $50 million, and
we understand the cost of the plant is about $600 million.
Mrs. BOLTON. I was taught not to feed or equip or do anything else
for my enemies, and I think we are doing that on every hand and I
,don't like it, and I am protesting it at every conceivable place I can
.protest.
Wo supplied commodities to the Soviet bloc and it doesn't make
,sense to me. They are increasing their help to Hanoi. What sense
'does that make? Is it consistent for the house to pass a bill as it did
,on October 13, making it a crime, to aid our enemies in war, and then
through new trade agreements, for which some of you are responsible,
to begin aiding our enemies ourselves?
I just don't function that way. I don't understand it. What is in
all this, what is in it for (lie United States in all this I think there
is great danger on every side. What concessions are we requiring in
return for enlarged. trade ?
Mr. GREE-NwAi.D. -The, legislation that the President has requested
-would involve, the granting of most-favored-nation treatment. which
would give the Eaaern European countries better tan i if treatment in
the United States than they now receive. We would only grant the
most-favored-nation. treatment in the context of an agreement, which
.as you suggest, should have reciprocal benefits ,for American
Mrs. BouroN. We haven't, yet.
Mr. GREENwAnn. Congress hasn't given the authority for most-
-favored-nation treat men!
Mrs. BottroN. It is akvays the fault of Congress.
Mr. GREEN wAno. We, have not gotten int o t he stage of negotiation
?of agreements.
_Mrs. Kta,nv. It is a separate issue.
Airs. BouroN. We sell thread and machines and tools zinc' all kinds
,of things nails, screws, to I hese count ries. We say they are peaceful
it OURS. Yes, but there are screws in all kinds of war materials, and
nails and thread.
How do you justi fv any of that ? That is what I don't un.l.,e,;!and.
I pl'ot est it. Does anybody Want to speak to it?
1. SroEssta,. Mrs. Bolton, if I might, try. As I said in my state-
ment, t here are essentially (WO aspects to our policy. Of course we
Are, anding firm ap,sainsf aggression in Vietnam.
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Bourox. We. don't stop trade to Hanoi,
Mr. SiroEssEL. I think we do. We do not have trade with Ifanoi.
Mrs. Bourox. NVe don't have trade with Hanoi, hii ii our allies do..
STOESSE1.. We would also on the. other hand like to show these
Comnninis1 countries there is something in their own interest in t rying
to improve the well-being of their Own peoples, and to have better.
and more const ructive relations Wit] the West.
For example, On the Fiat auto plant, we think it is a good idea that
the automobile industry develop in the Soviet I7nion and that they.
SJ end their money on itutomol)iles mid roads and gasoline, stations and
motels, rattier than on the instruments of war.
Mrs. Bouroy. They are spending them on the instruments of war to
it great degree.
Mr. SI-on:As-Er,. liVe think this is a constructive step, that it shows.
they are beginning to take more interest in the welfare of their own
people. We see 1 his particularly in Eastern Europe. These coun-
tries are very interested in trade and peaceful relations-. We feel it i5.
I o our interest to encourage this. This will make then' less interested
then in aggression.
Mrs. BoLiroxi. of course the people of those count ries have always.
felt that wav.
ri.SitorissEL. Of course.
Mrs. KErt-,y. -Arr. Selden.
SELDEN. Thank you, Madam Chairman.
Mr. Stoessel, in line with -Mrs. Bolton's quest ioning, it was pointed
Out in several statements that credits have been extended since 19(12 to
several of the Eastern Enropenn countries, to wit : Hungary, Poland,
and Yugoslavia. What benefits have accrued to the United Slates as
a result of these credits? Could you list tny beiustits that have ac-
crued as it. result of I he credits that in ye been ext ended t o date ?
SiroEssim. Mr. Selden. T would say particularly with. regard to'
ugoslayia, that. we have tried in various ways to strengthen Yugo-
AAA-la's economy. Yugoslavia has -followed an independent course in
many ways, .and has served as an example for the other Eastern Euro-
pean countries.
It has, I think, -by its example in its economy and its agriculture
served to stimulate the other countries of Eastern -Europe to seek more.
independence. .We think this is a useful development and is a justis
hen non of the. aid to Yugoslavia.. Similarly, with regard to Rumania,
on know. Rtiman in is Iolloii i1i( in independent colfr:40.
'Hwy are stressing Rumanian nationalism. They are very interested
ti hi it good relat ions with the. West and with the trnited States..
I third; this is. obviously to our interest.
Mr. SELDEN. Do you think this is being done without the full knowl-
eOge and consent of Russia I
Mr. Sironsstm. I think it is very difficult for the Soviets to control'
this.
Arr. SELDEN. Don't you think perhaps Iii" Soviets
that we are taking -;01"11P of the burden off their binik as far as those
countries are concerned
l?fr. SToEss-Er,. T think they are rather concerned about this and:
would rather see these countries more directly 1111dPr their in Ihwn,,, and.
control. Khrushchey referred to this once, and said that the satellite
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
countries are? too big to spank. It is a situation now where -the Soviets
simply eannot control hem completely.
I think this gives thein some concern.
Mr. SELDEN. They didn't hesitate to spank Hungary.
-Mr. SroEssEL. That is right. I think ti lot of time has passed since
Hungary. Whether they could be able to mount such an operation
again and would feel this would be advisable and justifiable, I would
doubt.
Mr. SELDEN. We don't -know this, however.
Mr. STOESSEL. That. is right.
Mrs. KELLY. Before Mrs. Bolton leaves, she asked if you would sub-
mit for the record an answer t o the question whether. all of you make
recommendations to the President on this policy? Would you answer
that question for the record?
Ts that correct, Mrs. Bolton ? You asked if they advised or assisted,
and in what form or manner, the President in reaching these decisions.
s that the quest ion ?
Mrs. Rot: ox. Thai is part of it.
Mr. GREENAVXLD. May I I ry 10 answer it now? On the general policy
of relations with -Eastern Europe or specific problems relating to trade
or licensing, these are. generally a matter for interdepartmental dis-
cnssion and recommendat ion to the President. As you say, the Presi-
dent ultimately makes the findings. He makes the decisions.
It is based, to some extent at least, on recommendations made by the
various departments in the administration. I think all our depart-
ments are involved in this, depending upon our particular roles and
our particular responsibil it ies--the State Department, Department of
Commerce, and so forth.
Mrs. BouroN. But the Foreign Affairs Committee of the House
doesn't. have much say about anything.
Mrs. KELLY. It seldom hiss on issues of trade during the many years
of experience. that I have had.
MI's. BOLTON. AATe, are told it is none of our business.
Mrs. KELLY. MI'. WilalleY?
Mr. AVETALLEy. I was wondering what department of the Russian
Government do you talk with concerning United States-Russian
trade? is it the same as over here, the State Department and Foreign
Affairs and Commerce, or is it just one department ?
Mr. STonssEr.. I think in any negotiations with the Soviets on trade,
which, of course, have. not conic about yet, but if we ever get into this
situation, there would be representatives of the Soviet Ministry for
Foreign Affairs, that would be. our State Department; the Ministry
for Foreign Trade, which would have some elements of the Commerce
Department, but is not exactly comparable.
Mr. "WTI ALLEY. You say that the Sino-Soviet bloc no longer exists
as a monolith. What do you mean by that ?
Mr. STorssEL. Basically there is this very obvious split now between
Chin-a and the Soviet -Union. They are no longer on the same track.
So the Sino-Soviet bloc, I think, is broken. To take it a step further,
we formerly referred, and still do out of habit, to the Soviet bloc. But
I think that is no longer ft bloc because of the reasons I referred to.
I think there are increasing moves toward independence, on the part
of the East European. countries. Yugoslavia, of course, took the step
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32 RECET DE\ ELOPMENTS IN EAST-WEsT RELATIONS
'
II tany years a.It'o. Rumania is moving in that direction now. We feel
that it. is a misnomer to call this collection of countries a bloc.
Arr. YVHArrEy. You say we have bet ier relations with Eastern Eu-
rope. Mutt has brought- this about ? Ts it a, 50-50 deal. or is it just
"0 making tile 1.(11.-ances, or are they meet ing its nalf nay?
Mr. SToEssta.. They aro certainly making advances. Just on the
trade side, I think they are very interested in increasing their trade
with 'Western. Europe, which they have done to a great extent, and also
with the United States to the extent possible. Part of this, I think, is
that they have been unable to get what they need front the Soviet
Union. The Common Market in Western Europe is increasingly
strong.
MT. WHALLEY. Do they want to I rade with us pret I v much because
they can't get these things some other place?
Mr. SToEssfa.. It is not just that. I think they feel in the political
sense they would like to be less dependent on the Soviet Union.
Mr. WHALLEY. Thank you, Madam Chairman.
Mrs. KELLY. Thank you, Mr. Whalley.
Mr. -Fulton.
Mr. Furirox. Where did the President make his October 7 speech?
Mr. GREENWALD. It was made in New York to the National Con-
ference of Editorial Writers at the (-".arnegie Endowment Building in
New York.
Arr. Fuurox. flas legislation been sent up to the Congress to irnple-
ntent the proposal for most-favored-nation treatment for various Com-
munist nations
Mir. GREENWALD. It was submitted by th0 Secretary of State at the
III struction of the President last, spring. It was done in May.
Mr. 1;ur:rox. What is the legislation ? Give us the number
Mr. GREEN-AA-m.o. It is II.R. 15'21'2, entitled "The East-West. Trade
tZelations Act of 1960."
Mr. Frurox. Is it before the Kinkily,- and Currency Cormnittee, or
where is it?
NI-E. GREENWALD. The House Ways and Means Committee has the
responsibility. Representative Keogh introduced_ it in the Ilouse.;
Senator Magnuson, for himself and on behalf of Senators Mansfield
and Jay its, in the Senate.
Mr. Furfrox. And Mansfield in Cie Senate?
Mr. GuEnxwAr.n. Mansfield and Magnuson.. Mansfield was not
there that day, and Ma!rmison int rminced it. and Senn t or Jays.
i\ Er. Frt.rroy. We want to follow down and see what the specific
provisions are so that .1 would ask. with the chairman's -permission,
that we have an explanation oft he adm in ist rat ion's legislative proposal
put in the record at this point.
Mr. GREENWALD. t would be glad to leave it copy (:f. the text of tile
pEr:DOSNI le:Hsl at ion with :In explanation of the provisions.
Ft-urox. I would like an explanation really, is what I :urn asking.
Afrs. KiEr.r.y. For the. record, Mr. Fulton?
Mr. Funrrox. For the record. Whatever the legislation is in, with
its proper numbers of the Senate and the. Itouso and its sponsorship,
put in the committees that it is referred to and then I would like a
.?smrt-, explanation made of the proposal at this point in flue record.
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(The material referred to follows:)
[ State Department press release 107 dated May 11, 19661
EAST-WEST TRADE RELATIONS ACT OF 1966
DEPARTMENT ANNOUNCEMENT
Secretary Rusk on May Ii transmitted to the Congress proposed legislation
to provide the President with the authority necessary to negotiate commercial
agreements with the Soviet Union and other nations of Eastern Europe to in-
crease United States trade in peaceful goods with these countries.
The proposed East-West Trade Relations Act of 1966 was sent with identical
letters from the Secretary to Speaker of the House John W. McCormack and
Vice President Hubert II. Humphrey, President of the Senate.
Secretary Rusk's action today was taken pursuant to instructions of President
Johnson on May 3.1 At that time, the President recalled that he had promised
in his state of the Union message to request the proposed authority. The Presi-
dent added :
"The intimate engagement of peaceful trade, over a period of time, can in-
fluence Eastern European societies to develop along paths that are favorable to
world peace.
"After years of Careful study, the time has now come for us to act, and act
we should and act we must.
"With these steps, we can help gradually to create a community of interest, a
community of trust, and a community of effort. Thus will the tide of human
hope rise again."
MAY 11, 1966.
LETTER OF TRANSMITTAL 2
DEAR MR. SPEAKER: At the direction of the President, I am sending to the
Congress proposed legislation to provide the President with the authority neces-
sary to negotiate commercial agreements with the Soviet Union and other na-
tions of Eastern Europe to widen our trade in peaceful goods, when such agree-
ments will serve the interests of the -United States.
This authority is needed so that we may grasp opportunities that are opening
up to us in our relations with the Soviet Union and the countries of Eastern
Europe. It is needed, at a time when we are opposing Communist aggression
in Viet-Nam, in order to carry forward the balanced strategy for peace which
under four Presidents, our country has been pursuing toward the Communist
nations. It is needed to play our part with the NATO nations in reducing ten-
sions and establishing normal and lasting peaceful relations between the West
and East in Europe.
New Opportunities
It is the normal and traditional practice of the United States to encourage
peaceful trade with other countries--even those with which we have serious dif-
ferences. Yet for nearly two decades, we have put major restrictions on our trade
with the Soviet Union and Eastern Europe. We applied these restrictions only
when the Soviet Union extended control over its Eastern European neighbors
and embarked on a course of aggressive expansionism. They properly signified
our moral protest against the subjugation of half a continent and gave our protest
practical economic effect. Now, however, the hopes that guided our policy have
begun to be realized.
In recent years, there haVe been substantial changes among the Communist
nations, within themselves, and in their relations to the nations of Western Eu-
rope. Windows in Eastern Europe are being gradually opened to the winds of
change. Most of the countries of Eastern Europe have shown signs of increasing
independence in guiding their own economic and political courses. They have
shown greater concern for the needs of their citizens as consumers. A growing
trade in peaceful goods has sprung up between Eastern Europe and the Western
world. The Soviet Union itself has recognized this need for more responsive
action in its own country as well as in Eastern Europe.
1 [State Department] BULLETIN of May 23, 1906, P. 794.
2 An identical letter was sent to the President of the Senate.
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:34 RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
This process of change is continuing. It presents growing opportunities for
the United States and for the cause of freedom.. But We are not now able to
7.eke full advantage of these opportunities. Our trade policies which once served
our national interest no longer do so adequately.
What then is needed?
The wee kness in our position tat he out tinted. inflexible row firemen t of le w that
we impose discriminatory tariffs on the import of goods from Communist coun-
tries. All imports from the Soviet Union and Eastern Europe. excepting Poland
end Yugoslavia. are subject to the originel rates of deity in the United States
Act of 1.9:4). The President has no authority to negotinte with any of these
countries for the advantages that we (lin gain from offering them the more
lii vore hie rates that have been negotiated under reciproce I trade agreements
over the lest thirty years end that now apply to imports from all other nations
With whon?ve trade. We alone of ell the major Free Vt orld. countries have so
tied our hem's.
The inability of the President to negotiate on this matter sharply reduces his
power to use the great economic power of our trade es a bargaining instrument.
In the light of this situation, the President said in his 194El State of the Union
l'dossage :
"In Eastern Europe restless nations are slowly beginning to assert their
identity. Your government, assisted by leaders in labor and business, is explor-
ing ways to increase peaceful trade \\ Ph these countries end with the Soviet
Union. T. will report our conclusions to the Congress."
Accordingly. to supplement the studies being ii ado in the Government. on
February 10, 1905. the President appointed a Specie] Committee on U.S. Trade
Relations with Eastern European Countries and the Soviet Union under the Chair-
manship of Mr. .1. Irwin Miller. Each member wes a widely respected and experi-
enced leader from business, labor or the academic world.
The Special Committee made its report to the President on April 29, 1905.4
Thet repUri, pr()videS it searching, am] 1,;11:11)eiAl lysis (if this complex and
important subject. It deserves careful study by Ii citizens end members of the
Congress interested in -this subject and in this proposed legislation.
The Special Cinumittee concluded that to aceomp!ish our nurposes in Eastern
Europe we must be :dile to use our trade policies flex-ilily and purposefully. The
Committee recommended, specifically. that the Pres.dent should he given discre-
tionary authority to negotiate commercial agreements with individual Commu-
nist countries when he determines any suelt agreement to he in the national
interest end to gant them in such agreements the tariff treatment we apply to
ell our other trading partners.
The .1.dministretion egrees with this recommendetion of thi, Special Commit-
tee and this is the principal authority asked in the proposed legisIdtion.
B,-nctit8 of the LogiOation
,,Ve must cotder the potential honefits and linOilities that may flow from
emoting or failing to enact the proposed legislation.
There is abundant evidence that wit 11(1111 I lie authority this legislation would
provide. we are losing end will emit bine to lose significant opportunities to influ-
ence the course if events in Eastern -Europe. By denying ourselves the it
to enter into meeningful commerciel with thei.;ii nal ions, we' deprive
ourselves of the eeliiiOnlie benefits that will conic to us from increasing trade.
More important. we deprive ourselves or a bargaining tool or considerable
strength and -utility. We ununeeessarily limit our influence in Eastern Europe
relative to the influence or other natieff-: engaged in or Opelliti:Li; ?vider trade there.
The enectment of lite proposed legislirt ion would not weeken or injure the posi-
tion of the United Ste tes in any way. The legisletiori does not in itself mal?, eny
grant or concession of any kind to the Soviet Tlnion or any Eastern European
to entry. It wonld not weeken our higisletion. our I- obey or i;or c.ontrois on ex-
fsrls of stridegie .gootis to Communist eon/dries. its !..ble orb, woind be to give.
the President added strength to negotiate with these C01111111mkt countries to
ottain concessions and benefits that will serve the national interest of our country
in return for grunting the same tariff arrangement:, already available to other
colntries.
The lienetits the legisletion could be numerous and valueldii.
r Jon. 20. 1965, I 91.
ItI71,LETrN of Ally 1-11). 1966. p. 840.
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First, improving our trade relations with these countries would be profitable in
Itself. As their national economies turn more and more toward consumer needs
and desires, they will become more attractive markets for our exports. We lead
the world in the efficient production of goods which enrich the quality of every-
day life. We can expect that new and increasing export opportunities will open
up for American industry, ..linerican agriculture ;did American labor. While this
trade potential may be modest Jul the foreseeable future in relation to total United
.States exports, it could, nevertheless, be signifteant over the years and of particu-
lar importance to American agricult tire and to certain American industries.
Although any agreement with any individual nation will necessarily and prop-
erly open the way for increased sales of that nation's preducts to Americans who
want to buy them, we have no reason to fear such trade. American industry is
the most competitive in the world and thrives on the stimulus of competition.
Second, authority to relax tariff' restrictions will give the President the ability
to negotiate more effectively for any of several objectives important to the United
States. These might include, for example, provisions for the settlement of com-
mercial disputes, the facilitation of travel by United States citizens, the protection
of United States copyrights, patents and other industrial property rights, assur-
ances to prevent trade practices injurious to United States labor and industry, set-
tlement of financial claims and lend-lease obligations, more satisfactory arrange-
ments in cultural and information programs?and others of our economic, politi-
cal and cultural objectives. These possibilities are of course only illustrative
and it is improbable that all of them could be dealt with in a single agreement.
We will need to test each negotiation for the gains to be made in it.
The Congress may be confident that no agreement will be made under this au-
thority except hi return for benefits of equal importance to the United States.
Moreover, each agreennint wail include a provision for suspension or termination
upon reasonable notice, so that the President may?and the Congress may be cer-
tain he would---suspend or end the obligations of the United States if he deter-
mined the other party were not carrying out its commitments.
Third, the most important benefits from any such agreements would develop
more slowly. We cannot- expect trade alone to elninge the basic nature of' the
iClommunist system in any Eastern European country 1 air to settle fundamental
differences between us. We can, however, expect that the many close relationships
normally growing mit of trade will provide opportunities for influencing the de-
velopment of their societies toward more internal freedom and peaceful relations
with the free world.
A healthy growth of trade will licIp to reduce the present dependence of these
Eastern European countries on l'1.041 other and the Soviet Union. They will be en-
couraged to rebuild the :friendly ties they have historically bad \Nat Ii the West.
Independent actimt ivi it lificonte more attractive and more feasible. The conclu-
sion of an agreement with any of these countries will be an inducement to others
to seek the same benefits.
The very nature of trade, the necessity to follow established rules of behavior,
the increased contact with the West, the increasing use of wesi ern goods, the
growing appreciation of their quality and of the efficient methods of their manu-
facture, the growing understanding of the skills, opportunities and earnings of free
labor in the United States and other Western nations, the greater exposure to
the miracles of American agriculture- -all these things could encourage increasing
liberalization of the internal economies of the Eastern European nations.
The Soviet Union and other nations of Eastern Europe are inereasingly con-
scious of their stake in stability and in improving peaceful relations with the
outside world. Progress toward normal trade relations will increase that stake.
Under the terms of the proposed legislation, each agreement would be only
one step in the process of reducing tensions. Agreements would not be of in-
definite duration but would be subject to periodic review and to renewal at
regular intervals. Each review cicada become a new opportunity for a useful
dialogue with a Conununist country. Each renewal could be adapted to encour-
age the further peacefut evolution of that individual country and the improve-
ment of our relations with it.
There is wide and growing understanding, throughout the country that im-
proved conditions for peaceful trade with the Soviet Union and the countries of
Eastern Europe would be in the national interest and should be a /ironer subject
of negMiation with those countries. 'A fa il busineSS, in and agricultural
leaders and other expert witnesses who testified in the extensive hearings held
on this subject by the Semite Foreign Relations Committee and the House Foreign
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36 RECENT DEVELOPMENTS IN EAST-WEST RI LATIONS
Affairs Committee concluded that the United States could benefit from the possi-
bility of wider peaceful trade with the Eastern Eurvean countries under proper?
safeguards. So too have a -number of leading private organizations that have
si tidied the problem.
To fulfill his Constitutional responsihilities for the conduct of our foreign
policy in this complex era. the President must have a N":.1 (i him every appro-
priate bargaining tool. _Nowhere is this need more orb ical than in our relations
with the Commit/list countries. Granting this fli.xilde authority to the President
would not be a concession to the Communist world. Rather. it would give him
t valuable instrument of foreign policy to be used where and when it will ad-
vance the interests of the United States.
Coaductitig a Bo ecd, in tratc fly
addition to the gains already stated which lie proposed legislation can
}win to realize, it can be an important element in our balanced strategy for peace.
We are reaffirming in Viet Nato as we have on many earlier hattlefields?our?
determination to aid free and independent nations to defend themselves from
dstruction by Communist aggression or subversion. But determined resistance
to such force is only a part of our strategy to maintain a peaceful world.
It has equally been our purpose to i i0111 onstrnte to the Cianmunist countries
that their best interests lie in seeking the welliwing of their peoples through
peaceful relations with the nations of the free world. We want the Soviet
Union and the nations of Eastern Europe to understand that we will go step,
by step with them as far as they are willing to go in exploring every path toward
enduring peace. We require only that our willingness and our actions be
pmuinely matched by theirs.
We are confident that this policy is sound even when we :ire fighting against
Communist weapons in Viet-Nam. Indeed, it is when we are resisting force with
free that it is most important to hold open every possible avenue to peace. We
need to make unmistakably clear to all the Communist nations of Eastern
Europe that their best interests lie in economic development and peaceful trade,
not in support of futile attempts to gain advantage through the use of force.
The Legislation
The proposed legislation contains five principal provisions.
The first states the purpose of the Act, particularly to use peaceful trade and re-
lated contacts with Communist countries to advance the Tong-range interests
of the United States.
The second authorizes the President to enter into a commercial agreement
with a Communist country when he determines it will promote the purposes of
the Act, will be in the national interest and will result in benefits to the United
States equivalent to those provided by the agreement to the other party.
The third states some of the benefits we may hope to gain in such agreements.
The fourth limits each agreement to an initial period of three years, renewable
for three-year periods. B. requires that each agreement provide for regular-
consultations on its operations and on relevant aspects of United States relations
with the other country. It also requires that each agreement be subject to sus-
pension or termination at any time on reasonable notice.
The fifth is the central provision recommended by the responsible groups study-
ing this matter: the President woulti. have authitrity to proclaim most-favored-
nation treatment for the goods of Communist nations with which a commercial
agreement is made under the Act. Snob MEN treatment would continue only
so long as the agreement is in effect.
The President would have the authority to suspend or terminate any proclama-
tion made !Hurst-if-int to this Act. The President should do so whenever ho deter-
mines that the other party to the agreement is no longer fulfilling its obligations
under the agreement, or that suspension or termination is in the national interest.
As pa rt of his negotiating power with respect to a commercial agreement with
the Soviet -Union, the President would have authority to terminate the existing-
provisions of law excluding certain furs of Soviet origin.
The authority of the Act would not extend to Communist China, North Korea,
North Viet-Nam. Cuba or the Soviet Zone of Germany.
The hill expressly provides that it does not modify or amend the Export Con-
trol Act or the Battle Act which together control the export or military articles
and strategic goods and technology which would adversely affect the national
security and welfare of the United States.
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The bill does not change in any way existing laws and regulations prohibiting
:aid and limiting credit to Communist countries.
All agreements will be promptly transmitted to both Houses of Congress.
Conclusion
In 1958 President Eisenhower made it clear that "the United States favors
the expansion of peaceful trade with the Soviet Union" ' and spoke of the im-
portance of trade as a means of strengthening the possibilities for independent
actions by the countries of Eastern Europe.
President Kennedy in his first State of the -Union Message 0 declared his
idetermination that "we must never forget our hopes for the ultimate freedom
and welfare of the peoples of Eastern Europe.
ln December, 1964, President Johnson expressed our wish "to build new bridges
to Eastern Europe-bridges of ideas, education, culture, trade, I echnical co-
operation and mutual understanding for world peace and prosperity." ' In
May of this year, the President again referred to the way in which "the intimate
engagement of peaceful trade, over a period of time, can influence Eastern
European societies to develop along paths that are favorable to world peace."
The authority asked in tins legislation will help attain goals.
In Greece, Berlin, Korea, Cuba, and, now, Viet-Nam we have tried to con-
vince the Communist countries that the road of aggression and subversion has
a dead end. This legislation will help us provide the positive counterpart to
that lesson. It will give the President a vital instrument of negotiation to
maintain essential balance in our relations with the Soviet Union and with t the
Communist countries of Eastern Europe and to respond to their growing desire
and opportunity for wider contacts with the West. _It will thereby serve our
,own interests and the cause of peace and stability.
Sincerely yours,
DEAN RUSK.
TEXT OF PROPOSED LEGISLATION
A BILL To promote the foreign policy and security of the United States by providing
authority to neg,otiale commercial agreements with Communist countries, and for other
purposes
.11e it enacted by the Senate and House of Representatives of the United States
of America in Congress a881171bled,
'SEC. 1. SHORT TITLE.
This Act may he cited as the "East-West Trade Relations Act of 1966".
Stt;.c. 2. STATEMENT OF P URPOSE S.
The purposes of this Act are----
(a) to use peaceful trade and related contacts with Communist: comttries
as a means of advancing, the long-range interest of the United States in
peace and freedom;
(b) to promote constructive relations with Communist countries, to con-
tribute to international stability, and to provide a framework helpful to
private United States firms conducting business relations with Communist
state trading agencies by instituting regular government-to-government
negotiations with in diV idual Conummist countries concerning commercial
and other matters of mutual interest ; and
(c) to increase peaceful trade and related contacts between the United
States and Conummist countries, and to expand markets for products of the
"United States in these countries by creating similar opportunities for the
products of Communist countries to compete in United States markets on a
nondiscriminatory basis.
'Sae. 3. ALT-DOM-TY! To EN1'FA1 1 N TO II !OM NIERCTAL A GREEME NTS.
The President may make a commercial agreement with a Communist country
providing most-favored-nation treatment to the products of that country whenever
he determines t hat such agreement ?
(a) will promote the purposes or this Act,
(b) is in the natmnuiuul int erest, and
(c) will result in benefits to the United States equivalent to those pro-
vided by the agreement to till' other party.
For text of President IlAsenhower's letter of July 14, 1958, to Soviet Premier Khru-
,sheliev, see llummmx of Aug. 4, 1958, p. 200.
6 For text, see ibid., Jan. 11, 1961, p. 207.
For text, see ibid., Dec. 21, 1004, p. 576.
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St:c. I. IIENErrts TO BE PROVIDED ft)" COM MERCTAL AGREE-MP:NT
Tlip 11011e1iIS IO the 1iiIil SI Is Ic Le Obtained ill or in conjunction with a
commercial agreement made under this Act may th e following kind, but need.
not be restricted thereto :
(a) sal isfactory arrangements for the prot ection of industrial rights and
I)' 0(5505
(hj soti:4fil ci orya rrzingeinents for the settlement of commercial differences
and disputes ;
(c) arrangements for establishment. or expa.T,ion of Cnited States trade
and tourist promotion offices, for facilitation of such efforts as the trade
promotion activities of Vtlitod States commercial officers, participation in
trule fairs and exhibit s. the sending- of trade missions, and for facilitation
of entry and travel of commercial representatives as necessary ;
(d) fratst-favonabnation tf.eal111Plit With respect to du I it?,, or other restric-
tions on the imports of the products of the IThited States, and other arrange-
ments that may secure market access and. 11S5(1170 fair tre::lintent for products
ofthe United SI II teS ; or
((S) satisfactory arrangements (1 rvering (11-hm:; mattf,rs affecting
between the United States and the country concerned, such is the settlement
of financial and property claims 1111(1 the improvement of consular relations.
St:'. 5. PnovIstoNs To BE INCLUDED IN COMMERCIAL A 3REEMENTS.
A commercial agreement made under this Act shall--
(a) be lintited to an initial porn (1 specified ill the agreement which shall
be no more than three years from the time the agreement becomes effective ;
(b) be subject to suspension or termination at any time upon reasonable
notice;
(c I provide nfr consultotiom: at regular intervals for the purpose of re-
viewing the operation of the agreement and relevant aspects of relations
between the Unit ed Stales and the ot her party ; and
(d) be renewable for additional periods. ens' i not to exceed three years.
Se.c. (1. EXTENSION. OF BENEFITS OF MOST-FAVORED-N..kT FON TREATMENT.
(a.) in order 1-0 carry out a commercial ag-reement made tinder this Act and
notwithstanding the provisions of any other In iv. the President may by procla-
mation extend most-favored-nation treatment to the products of the foreign coun-
try entering into such commercial agreement : That the application of
II1 1St-favored-rortinn treatment shall be limited to Ill)' tteriod of effectiveness of
such commercial agreement.
(b) The President may at any -time suspend OE terminate any proclamation
issued under subsection (a). Tho President; shall suspend or terminate such
proclama.ti on whenever he determines that?
(1) the other party to a commercial agreement made under this Act is
no longer fulfilling; its obligations under the agTeement : or
(2) the suspension or termination of the agreement is in the national
interest.
Sne. 7. ADVICE FROM GOVERNMENT AGENCIES AND OTHER SOITRAT;S.
Before ma king a oommercia 1 agreement under this Act. I to President sha 11
sPek information and advice with respect to such agreement from the intt.rested
Tartments and agencies of the Fri it States Government. from interested
private persons, and from such other sources as he may deem appropriate.
SEr. S. TRANSMISSION Or REPORTS TO CONGRESS.
TflP President shall submit to the CO,1,14-EOS an animal report tAl the commercial
agreements program instituted under Gds Act. Such report -hall include infor-
mation regarding negotiations, benefits obtained as a result of commercial agree-
ments, the texts of any such agreements, and other information relating to the
program.
SEC. 9. LIMITATION ON AUTHORITY.
The authority conferred by this Act shall not he 11 tO 011(1 most-favored-
rint ion treatment to the products of a rem: dominated or cord rolled by the COM-
tmmist regimes I uf China, North Viet-Nano North Korea. Cuba. or the Soviet Zone
of Germany.
Ste. 10. RELATION TO OTHER LAWS.
(a) This Act shall not apply to any agreement made with a country whose
products are receiving., when such agreement is made, the benefits of trade agree-
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ment concessions extended in accordance with section 231(b) of the Trade Ex-
pansion Act of 1962 (19 U.S.C. sec. 1801(b) ).
(b) Nothing in this Act shall be deemed to modify or amend the Export Con-
trol Act of 1949 (50 U.S.C. App. sec. 2021 et seq.) or the Mutual Defense Assist-
ance Control Act of 1951 (22 U.S.C. sec. 1611 et seq.).
(c) The President may by proclamation terminate hettdnote 4 to schedule 1,
part 5, subpart 11 of the Tariff Schedules of the United States (77A Stat. 32, 19
U.S.C. sec. 1202) with respect to the products of any country to which it is
applicable upon the entry into force of a commercial agreement made under this
Act with such country.
(d) Any commercial agreement made under this Act shall be deemed a trade
agreement for the purposes of title Ill of the Trade Expansion Act of 1902 (19
U.S.C. sec. 1901 et seg.).
(e) The portion of generai headnote a(e) to the Tariff Schedules of the
United States that precedes the list of countries and areas (77A Stat. 11: 70 Stat.
1022) is amended to read as follows :
"(e) Products of Communist Countries. Notwithstanding any of the foregoing
provisions of this headnote, the rates of duty shown in column numbered 2 shall
apply to products, whether imported directly or indirectly, of the countries and
areas that have been specified in section 401 of the Tariff Classification Act of
1962, in sections 231 and 257(e) (2) of the Trade Expansion Act of 1962, or in
actions taken by the President thereunder and as to which there is not in effect
a proclamation under section 0(a) of the East-West Trade Relations Act of 1966.
These countries and areas are :"
SummANY or PROPOSED EAST-WEST TRADE RELATIONS ACT OF 1966
Following are a summary and analysis of the principal features of the pro-
posed East-West Trade Relations Act of 1966, which has been. prepared in the
Department to provide information on the main effects the legislation would
have.
SUMMARY
The proposed East-West Trade Relations Act would give the President author-
ity to use trade with Eastern European countries and the Soviet Union as a
flexible tool in the conduct of relations with these countries. As a companion
to existing provisions of law which use the negative power of trade denial?
the Export Control Act, the Battle Act, and restrictive provisions of other laws?
the East-West Trade Relations Act would equip the President to use the positive
aspects of trade to serve our national objectives.
The major substantive provision would be authority to extend most-favored-
nation (MEN) tariff treatment to certain individual Communist countries when
this is determined to be in the national interest. The authority could be exer-
cised only in a commercial agreement with a particular country in which such
MEN treatment would be granted in return for equivalent benefits to the United
States. MEN treatment for the products of any country would stay in effect
only as long as the commercial agreement with that country would be in effect.
The purpose of these commercial agreements would be both to facilitate in-
dividual business transactions and to afford the United States Government an
opportunity to deal with individual Communist countries on a variety of matters
in the context of periodic trade negotiations. Agreements made pursuant to the
act would set the framework for trade, but the trade itself?both exports and
imports?would depend on decisions of individual firms.
ANA1.YS1S OF PRI NCB? AL FEATURES
Statement of Purposes
The stated purposes of the proposed act are to use trade with Communist corm-
tries as a means of advancing the national interests of the United States, to pro-
vide a framework for 10 S . firms to conduct business with Communist state trading
agencies, and to expand markets for U.S. products in those countries by giving
their products an opportunity to compete in U.S. markets on a nondiscriminatory
basis.
MFN Trade Treatment
The act would give the President authority to use most-favored-nation treat-
ment as a bargaining instrument in negotiating commercial agreements with in-
dividual Communist countries. The authority to conclude agreements could be
exercised only upon a determination by the President that an agreement with
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a particular country would promote t he purposes of the act. would be in the
national interest, and would result in benefits to the United States equivalent to
those provided by the agreement to the other country. The act would not permit
negotiation of individual tariffs. It would not permit negotiating or granting of
tariff rates lower than those agreed on an A.IEN basis and set out in column 1
of the Tariff Schedules.
Bxehange of Benefits
Commercial agreements under the act would hr made only on the basis of
tixchange of benefits. The proposed act sets forth by way of illustration a number
of benefits that might be obtained by the -Unit kid States in exchange for most-
favored-nation trade treatment. Among the possible benefits are arrangements
for protection of industrial property, settlement of commercial disputes, promo-
tion of trade and tourism, trade fairs, trade missions, entry and travel of com-
mercial representatives, most-favored-nation treatment for United States prod-
nets, other arrangements to secure market access and assure fair treatment for
United States products, improvement of consular relations, and settlement of
claims. Agreements authorized by the act would provide for regular consulta-
tions. Such periodic review and confrontation procedures could cover not only
commercial matters but also relevant aspects of overall relations between the
United States and the other country.
Safeguards
The act worthl provide that before the President would eMer into any agree-
ment under the act, he should seek information with respect to it from all of the
Ilaiited States Government agencies concerned, interested private persons, and
other appropriate sources. Since the the act. would not nut horize negotiation
on individual tariffs and would not authorize redactions in tariffs below the
prevailing most-favored-nation rates, there is no special provision for prenegotia-
tion procedures. However, the procedures for adjustment assistance and escape-
clause relief set: forth in the Trade Expansion :1(.1- would hii amilleable in the
case of articles imported in increased quantities as a result- of most-favored-
no lion tariff I refitment extended to a country in aceordance with an agreement
pursuant to the act. Antidumping lavi-s and all other laws for the protection
o/' United States industry. agriculture, and labor would rental!! in full effect. Tn
aildition, problems of interest to Ameriean businessmen could be dealt with under
the consultation procedures or in the periodic negotiations to he provided for in
agreements under the act.
Any initial agreement would he limited to 3 years and could be renewed for
periods not to exceed 3 years each. Any agreement could be suspended or I ernd-
nu ted at any time on reasonable notice. MEN would apply only while an agree-
taunt was in effect. The President would be directed to suspend or terminate
MEN whenever he determined that the other party was no longer fulfilling its
obligations under the agreement or that the suspension or termination was in the
national interest.
0.,antrics Covered hy the _let
The act would apply with regard to Communist countries cxcept Cuba, Com-
mimist China, North Korea, and. North Viet-Nam, and the Soviet Zone of Germany.
Existing law and regulations will assure that no benefits of 1 I 1,, act will be made
ava liable to these countries.
Poland and Yugoslavia now- receive itiost-favoredniation treatment Binder sec-
tion 231.(b) of the Trade Expansion At -t, and they could continue to do so.
LlcIation to Other Bares
The act would provide that the President could terminate
iimiort of furs front the Soviet ITnion if :1.1.1 agreentent wl
concluded pursuant to the act.
Toe act would not disturb the -Rattle Act. the Export (Tont
lions thereunder. Thus, controls on strategic exports would_ re
there wouli lie a eontinued prohibition on aid to any af the Co
concerned.
Ft?LTo. Would you put in I' reeorti, I co, if you can do it very
shortly. .tetually vital -happened in lie stnurn.sr ()I 1963 on the eredit
proposal for the V.S.S.IN. for the purchase of wheat What did hap-
pen? they buy? Did we guarantee!
the prohibition on
li that comitty is
rol Act, or regula-
te:tin in effect, and
rn Mlist coin tries
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Mr. SAITER. The Export-Import Bank was never called upon by tire
U.S.S.R. to guarantee or otherwise extend assistance in connection
with the sale of any wheat to Russia.
Mr. Ftufrox. All that turmoil that was raised in 1963 in the summer
and the early part of 196.1 on. ext ending credits to Russia by the Export-
Import Bank Ca1110 to not because there was no agreement made?
Mr. SAUER. That is correct.
Mr. MCNEILL. If I may, Congressman, there was wheat shipped to
the Soviet Union. There was no necessity for the, extension of Export-
Import Bank credit because the Soviets paid cash for their purchase.
Mr. FULTON. HOW much did they buy then, and what was the total
Give me the date, the an tou at of wheat, and the total cost.
Mr. GREENwALD. It was a $1-10 million sale.
Mr. FuLToN. How DOLCIF-. -- ---
Mr. GREENWALD. It AVa,S 'In 9G1. I don't have it in terms of how
much wheat was involved. In fiscal year 1.963-04 the United States
exported 65.6 million bushels of wheat valued al:, $140.2 million to the
U.S.S.R. with payment in full on a c.i.f. basis.
Mr. FULTON. Tons: put it in the record. Give me a copy of that
yellow proposal, the administration proposal, and also your blue book
there that you have.
Mr. GREENWALD. Tit is is the Battle Act Report, for 1965.
Mr. FULTON. Let, me- have, that copy.
Mrs. KELLY. it. crossed your desk.
Mr. FuLToN. That is all.
The Department of Commerce subsequently furnished the billowing addi-
tional information on wheat mid wheat flour sales to Eastern European destina-
tions in the 1903-434 period : )
During this period the Department licensed to Eastern Europe 4.5 million
metric tons of these products, valued at $355.9 million. None of the wheat flour
sales licensed was consummated. Wheat sales to Russia were consummated for
1.7 million tons. for which the exporters received approximately $140 million,
incluaing Hie cost of deli cry. Wheat sales to other Eastern European destina-
tions totaled about 376.000 metric tons, for which the exporters received almost
$20 million. No further sales of these products were made to Eastern Europe
until October of 1965 when approximately 45,700 metric tons were sold to the
Soviet Zone of Germany, at an approximate value of $3.5 million.
Mrs. KELLY. MI'. i\Iontgan.
Mr. MONAGAN. Eiscmitial iv, t his legislai ion would extend the most-
favored-nation treatment to Communist countries that are not in-
Mr. GREENwALD. That is right.
Mr. MONAGAN. That. are now prevented from having the benefits of
the 1-110St -fTVOIVLI-11nt ion I real ment.
Mr. STorssEL. It would give the President authority to grant MFN.
Mr. MONAGAN. Primarily Czechoslovakia, Hungary, other countries
of Cent ra Eu rope. On that_ point t he granting of the licenses to these
400 items applies to our sales to the Communist countries, is that right ?
Mr. McNELL.L. To Eastern European Communist countries.
Mr. MONAGAN. But basically speaking unless these countries have
the most-favored.-uat ion I real meta, is there much likelihoocl that this
would grow into very productive reciprocal trade?
Mr. McNEILL. In respect of t hese 100 1 ems.
Mr. MONAGAN. Yes.
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42 RECEN T DEVELOPMENTS IN EAST-WEST RELATIONS
Ali:NEILL. I think the answer to tha-: would be a very con-
jectural answer. I don't know. It proyitles the opportunity for our
tbusinessmen 0 compete for product s-----
Mr. MoN.kc,AN, In order to have the trade substan ial, permanent,
and productive, it would really have to he reciprocal ?
Alr. AkNELLL. If your quest ion is more ..reneral, that is, in order to
have increased trade in these 400 products or arty other products, will
it not be necessary for there to be an increase in two-way trade, the
>inswer is obviously "Yes," because they can buy front us only to the
extent, of their ayailtbility of dollars.
Mr. MONAGAN. Another question would be, assumin.0- that they had
he most-favored-nation treatment, what prospect of substantial trade
ii he nal lire I hat We have, let's say with Japan or West Germany,
would be in prospect ?
Mr. ArcNyttr,. Onr trade, with Japan alone on a P?vo-wav basis. is
about $4 billion a year, whereas our total trade with all of Eastern
Europe, including the Soviet Union in :1965 was only in the magnitude
of about $2.-)0 in both Wn vs. There xvould be a long way to go
before we can lmild up the level of trade that we have with Japan.
T think with most-favored-nation treatment certainly there would
be an incre>r4o in trade, but I think rho, increase would be gradual.
ley would have to produce: for OUP URI Eket. They would have, to be
al>le to produce the qualities and the quantities that 011E market would
rennin>, in compet ii on with of her foroitm ui ppl iers.
Illow rapid I be illCreaSe in trade would be, we just don't know. Cer-
tainly it Nvould increase.
? MoNio.kx. It certainly wouldn't open I he. floocates of sales of
-.S. products the Wn :?401110 of our Imsinessine> L seem to feel ?
? McNint.L. It wouldn't open :tny floochrates. I think it, would
provide a more normal basis Oil W11 iii to eolith-let trade.
Mr. Alois:AGA N. What does Hungary have that we want, to put it
bluntly?
Arr. NrcN in in. In terms of specific products?
Atr.111oNAGA.\--. Yes.
Arr. GREENwAr.D. I think that is one of I .te problems. We don't
really expect he t nub. i going to zoom immediately or that for a
long time it will ever reach a high level. Historically. we have not had
a great deal of trade with Easierll Europe. One reason is that they
don't have manv things that are ma rketable in the United States.
'nal; is what the Western Europeans have discovered. Most of
them have trade balances in their favor and they can't find goods to
buy from the Soviet Union and the Eastern European countries that
to marketable. They can take ra W materials and they have a market,
for example, for petroleum. But in the United States these raw mate-
rials probably wouldn't be able to find a. market.
Mr. MoNmt \ X. So that really except for the fact that they are look-
ng for strategic it ems as it a fertilizer fact Ory that you, Mr. Sauer,
spoke of lutylmr been recently financed in Hungary?
Nir. SAUER. I believe we haven't done any hard goods in Tiung-ary.
-We did a, petroleum plant in Rumania.
? AloxAGAN. When they are talking about trade, they are talk-
ing about items that will fill up gaps in their economy.
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Mr. SAL'ER. This is our impression at the Export Import Bank.
Mr. MoNAGAN. So it really is a poi itical quest
Mr. McNEILL. If I might address myself a little further to your
basic question. There is, as has been said at this t able, a great ferment
of a po1 it iciil nature iii the bloc it There is equally great ferment
in the economies of the -various Eastern European countries and the
:Soviet Union. The ferment is taking the form of an increased .at-
tention to the consumer goods areas; that is, the consumer is beginning
to -come into his Own. Because many of the industries in the Eastern
European countries are oriented not toward the, consumer, but toward
the necessities of the state, we believe it is in the interest of the. United
States to encourage this economic activity aimed in large part. at the
consumer.
This is going to take time, in Eastern Europe, until they become
what we might call -consumer oriented. It is going to be a long process.
.So we will not have sudden large spurts in mutual trade.
If you look to the years ahead, perhaps two or three decades, there
may be substantial volumes of trade between ourselves and Eastern
'Europe as there is currei illy bet \wen ourselves and West ern Europe.
We are talking about. all evolutionary matter. The President is saying
it is in our interest, to encourage this economic ferinent and the direc-
tion of that economic ferment and that we should better enable our
businessmen to compete for the business in Eastern Europe.
'Ile volume oftrade between Eastern mid Western Europe is in the
neighborhood of about $8 billion a year. Tins contrasts with our total
trade with Eastern Europe of $'250 million. Our businessmen are
asking the question why can't we be in a bettor position to compete for
this substantial volume of trade? Hopefully through the East-West
Trade Act the President would have the authority to better improve
the competitive, position of our exporters and traders.
Mr. MONAGAN. I think you make a very good point there which has
not been sufficiently emphasized in stating the objectives of this policy
with_ relation to the people of this country. On some of the items you
might, have some difference of opinion as to whether they were con-
sumer items a refinery I note here there were sonic iron aluminum
prayer rails that were going to be involved in the list of commodities.
Perhaps that is boring from -within to a certain extent, stimulating
religion and so forth.
Mr. McNtar,L. 1 don't want, to leave an incorrect, impression. When
I re-ferred to the consumer areas, I meant that production for con-
sumption 'requires the kind of fact ones and capital equipment neces-
sary for turning out consumer products. There.fore,our trade will not
be all in consiMier goods per se. There play be a large consumer goods
trade, but additionally there will be trade in capital products and
equipment, such as equipment used in the manufacture of fertilizer
in trying to assist the production of food for better diets for consmners.
Mr. INION:V1 AN. I don't di tier with the idea that we should be ready
t o fake tentative steps. I. want to make that clear. But what T am
ml crested in, and what I think all or us are interested in, icwhy is
this policy coming at t his part len] a r time?
Mr. mcNEIT,T,. Are:you talking about the list of 400?
I\ ION .1GA N. I. am talking- about the whole operation of which that
is only part, as the Export -1mport Bank is only a part. I awn n the
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44 RECENT DEVELOPMENTS IN EAST-WEST LATIONS"
general idea of building bridges. That has been substantially in
abeyance since the missile crisis, hasn't it, wouldn't you say?
Air. GREENWALD. 1 think the idea, of building bridffes to the East is
not a new one.
iMoNAc...c. Let's not argue thout wltether it is a change or
whether it is an expansion. it certainly represents at this point some
difference of emphasis to say the least.
Arr. GREE-N-wm,n. The general idea is I hat we are I tying to adopt, a
flexible policy toward Eastern Europe the Ilex ibi Ii y has to do with
timing as well as substance. In the judgment of I H President, this
time was right for such a statement which would help its to follow
what IVO call a two-track, 01 11 two-handed poi
Mr. AloNAGAN. Who started_ I his 1/id it start from IN, or did it
si 031 11 the Iiussittns!
Mr. GuKENtw.kr,n. I don't think who started what , t he whole pro-
gram of relaxation ?
Mr. MoNAGAN. This change ill emphasis that has come about in tile
last few weeks. Allot 11 511(1(1011 (;r( Illy1:0 has a smile on his face,.
and he leaves the IVhite I louse and says we are ptiII 1157* together, and
le, calls up Dean Rusk next day and says "Thanks for your 1105-
pitality.-
1We are int-1.'1'040d iii 1:110-Will!2: kV /INV t his 1/1?11 i at i v e comes front and
y hat the reason is for it, not necessarily being opposed to it, but want -
ing to know what reasoning is involved.
Ii fitu'u:NWALD. 1 (1011.1- kll ow 1 1131 t11011' I S 3111V :-TPCIfie eyent that
led to it. 1 11111k perhaps it is a general It and is related to
I I a, situation ot her places in the world, such as China.
Mr. MON 1A\. Viet/thin ?
Arr. GIZEENWAT.D. Viet 3131111 H something 1 hat perhaps pulls in tie
of_ her direction. fierences het ween the Soviet Uuion and China
over Vietnam, you mean !
Mr. MONAGAN. 1 mean the Soviet Union is preoccw,ied vil h 'hina
and Might be disposed to do somel him,' to hring t CI H1iCt 10 a close.
'Flint at least might be some it ificat 1011, some quid pro quo, Ho to-
speak, for I his sort of policy shift .
Mr. Srrorssrt. I think the Sovieis hay,, had for a low,: time all ll-
PIVtii ?ill 111Ilt10! 1 I V 1/(9114'1H:11 T:i 1,rtqlient!-: nih the lted Sboes ill
v :treas. They have been in hil,;t oil I think of late by I he e
posit ion. Every time till' Soviets would make an agreement, or make
a friendly statement nbout the I rilited t Crs. the Chinese y ouhl
(Tit icixe 113cm very strowdy.
The viers were renliv engaired, I I Ii)) I;, ill a sIll le for 0013)-
Ill ill I he Communist world with the Chinese. T think the, Chinese'
prestige has 9:0110 down rather drasi ical IV ill the last y:.:1 r or so. They
110 VI' 1111(1 de"fe,dii! 1I1IIIIV ar,,a,..1 of till, world. The re.?,,,,d- dev(dop_
ments in China with the lied Guards are ver k hard to understand. T
think also it has led to a drop in the Chinese prestiffe worldwide.
This has led to a corresponding increase in Soviet pre: ige. It is pos-
sible that the Soviets now feel freer I hemselves to make ;Igreements
\vii h us, to make moves which they otherwise would have been re-
luctant to do because of the fear oft lie Chinese.
',cow they may not worry so much about what the Chinese say.
They have been trying to get more unity frot? the 01 her Communist
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS 45
countries in criticizing the Chinese position. Just today there is a
meeting in Moscow of the European Communist Parties and Mon-
golia. We don't, know what. will come out of this. It probably has
something to do with the Chinese problem.
It is the first time, that the Soviets have been able to get all these
people together in Moscow. .1 think they may feel that their own
position is somewhat stronger and that they are more flexible and
able to deal On a better basis with the West.
Mr. MoNAnix. I just mach a list Of items here that came, to my mind.
Of course, it 15 1101 only the expansion of the trade list that is involved,
but lye. are talking. about consulates, We are talking about air service,.
I he FIAT plant comes in there, and then, of course, the. most-favored-
nat ion legislation. Now as soon as this statement is matte, by the Presi-
dent, then Brea-Nev comes out and says he is laboring under a delu-
sion. Do you say dna such a statentent is for g011 oral consmnption
in the Communist world :1)1(1. China? .Do von have reason to believe
that isn't the case as far as the basic feelings of the Russians are
concerned?
Mr. STOESSEL. 1 think his st:ttement was pro] al*,7 what might have
been expected. I Fe_ did say in that same statement that in principle
they also favored nnitually beneficial relations with the United States,
but Viet nam still stood in the way.
think under tile, eircunisiances this is what you could have expected
him to say. In fact, they are proceeding in certaiii areas, as we know.
They are going to sign i he air agreement with us. It looks promising,
I think, on I he outer space treaty. There. are a number of concrete
actions which I think- they are prepared to take, although they have to
take this sort of general propaga nda, line in 11 wit speeches.
Mr. AloNAGAN. Would you say that the, air service, as one example,.
is more favorable to them than it is to us?
Mr. STOESS EL. No; I wouldn't. We think it is in our interest to do
it. They must see sonic mil-ant age obviously in doing it.
Mr. MoNAGAN-. Their advantage is obvious to 1110 : I. would say that
the tourism and the hard currency coming in would be a. great advan-
tage to them and I don't see any real advantage to us in liar ing a Rus-
sian airline coming into NeW York-.
Mfr. STOESSEL. We look at it, I think, inore in the general sense, nt
keeping wit It t his whole policy of bridge building, and trying to open
up Soviet- society a little more. 'fhis is another window. We, would
like to see tourism increased. AVe would like to see more Americans
going there. We would like to see more Soviets coininghere Becauee
we feel the 1110FC So Vidttit llat see our conntry the better.
MoNAGA N. 1 ,,vould agree wit hi the lot tor part icul
Mr. SroEssta. They have always said that foreign exchange was a
bar to I his. Now .with their own airplanes coming, they should be
able to send more tourists here.
Mr. MoNAGAN. This change of at lit ude doesn't const itute any basic
change on t he part of the Soviets in their policy toward ns, does it
Mr. STOESSEL. It is not a basic change, no.
Mr. -.IVIONAGAN. We have had trouble with the cnitural exchange
program recently. They wouldn't let "I fell?, Dolly" come in. In the
-middle of this situation we have had the Czechs trying to bug George
Ball's office. down in the State Department. We had the. Mott case
72 416 67 4
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a terribly 1 1.:IffiC 111111r. 111(1 0110 11110 nppareidy they could
iiiL\O controlled Ti ti better than they (lid.
Those are tile apparent inconsistencies flint C(11100171 11H, We wonder
whit is the considern1 ion in view of this con Pining hard line 1 haf
l05 '15 to take the steps that we are npparent IV !r0111;2: 11) take.
This will be important. I might sn V. not only now but next yea a, if
and when we are asked to connderleoslation.
STOESSEL. These things are obyiousl V very complicated. There
are various strands in all of these, situations. Certninl v we don't feel
there lois been any fundamental change in the Soviet Union, its hostile
t tude or its police s1 ate syst em.
On the other hand. we see forces in the Soviet Union -which are
anxious to change this. There are evolutionary processes going on
which we would like to encourage. At the same time that we are
doing this, you are going to get things on the other side, as you have
mentioned, which reflect the more disagreenble aspects. We think it is
to our interest and in general to the interest of world stability and
peace to encourage these good trends in the Soviet fu ion and in the
East European countries. That is what we are trying to do.
INTr. MONAGAN. I know that von spell; with !Treat authority and
that you are one of our outstanding diplomats. that you have hind
extensive experience in the Soviet T-nion. so that I would give a great
deal of weight to what you say.
You did make one statement that (lid seem to me to fie inconsistent,
and perhaps you can point out to me where I amll wrong. You said
that the strengthening of NATO was a consideration which led to
Ink', ng these steps. It would seem to me that the contrary would be
true: that is, the basis -for NATO was resistance to Conummist aggres-
sion in Europe.
Ti. seems to me this is the contrary. that we arc enconrn ging develop-
ments almost the wny De Gaulle has (lone with the Soviet Union, which
don't mean to indicate is an unworthy objective, 1mi it does 'seem
to me to he. inconsistent with the other objectives of strengthening,
NATO and might lead other allies to feel that we hind changed our
minds ahout the need for NATO and were haying second thoughts
aboi it its purpose.
C,.?rtainlv one of the Prime obiectives of the F.S.S.IZ is to wen ken
1\-,- TO. You see the difTiculty that 1 have had ?
)1r. STonssr-L. Certainly T do. T inured ire it. T say that
while NATO fundninentall-y, of course. 1."115 1s!41:1111iS1 led 10 defend
:1,n1 inst Communist no-crression., it ttl Nvn VS had Ihe idea of making.
pos-
it some future date a seftlerneui of the out st aluliu, di fferences
\A t hi the Communist world. This was tilwnys implicit in NATO.
Secondly, T would say that we feel that flie hest wily 0 a erounul sb
the changes we would like to see in the Soviet Union and Eastern
Europe is to make sure that we are strong ourselves in i lie West. nod
ti nt the nations stand together and Inke a common st. .on these
liimrs, that if we are ft agmented. if we go off in different directions,
this ,ould encourage just those elements in the Soviet I.Tmon -which
we don't want to encourage, and that. the progress which we have
ninde, and we feel there has been progress in enconragm g. these evolu-
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RECENT DEVELOPMENTS IN EAST-WEST RELATIONS 47
tionary developments, has come about just because NATO has been
strong. There has been in the past, and we hope in the future, a
unity in the West.
I think there is the difference between our attitude and De Gaulle.
I think De Gaulle feels there is no longer a need for unity
Mr. MONAGAN. I was going to ask that question next.
Mr. Sronssm,. Ile would fragment the whole. thing. We think this
is the wrong way to proceed.
Mr. MoNTAGAN. Does this weaken the determination of our partners
in NATO other than I )e G-au tie, We are going to have seine real prob-
lems in the, immediate future in the transfer of the. NATO infrastruc-
ture and headquarters; but by agreement, and in theory at least, there
is a certain perc,en tao-e of contribut ion that is to be made by each of the
NATO countries. We haven't always in file past required that
S haring.
I just wonder if something like, this would make them less deter-
mined to put up their proportionate share. of these ca pit al expenses.
Mr. STons SEL. think in me is good agreement in NATO on this
policy and the consultations we haye I mel with_ them have been very
satisfactory. This, I think, came out at the Brussels meeting that
referred to earlier.
There is agreement that NATO should be kept strong and at the
same Li no that more emplia.sis should be given to this other aspect. of
trying to make a settlement of these outstanding differences between
the East and West, and that this too was a reasonable and justifiable aim
of NATO. I think they are together on that.
Mrs. KEnny. Could I inject a question at this point?
We have trouble in NATO, and it is pretty deep at the moment.
Mr. Monagan asked if these recent actions of our Government will
strengthen or weaken our position in that Orgaitization.
Now the President's speech, as I read it, referred several times to
the policy of consultation within NATO. Yet our recent actions seem
to be based on our unilateral decisions. Aren't we jumping ahead of
NATO by making these overtures to the East in the field of credits
and trade?
Mr. STonssim. Madam Chairman, I would think it. is not really so,
that most of the other countries of NATO are really ahead of us in
this field.
Mrs. KELLY. Is something happening within NATO to cause us to
make this substantial shift in our policy at this time? Do we feel that
we have been left behind?and that unless we take some significant
actions, the Organization is going to fall apart? Certainly our Gov-
ernment's recent actions do not strike me as a continuation of our past
policy. In my view, they represent a change.
As far as the administration is concerned, there is somethino? that
has caused these actions to be taken at this time. I am trying to find
out what it is. There must be a good reason for the timing of the
President's announcements--but we seem unable to find out from you
gentlemen what it is.
Mr. 1010-N-AGAN. You are sayinf, what I was saying when you were
away.
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48 RECENT DEVELOPMENTS IN EAST-WEST RELM IONS
Afr. Sironssnn. [think there; is a feeling throughout t he NATO cot in-
tries that exclusive emphasis on the military aspect of NATO
Airs. KELLY. By us
Mr. Sironssim. By anybody, by NATO as an organization.
Mrs. KELLY. There is sume ot her reason why we have dl me this.
Mr. MONACAN. 1 think Mr. St oessel related it also to the Russian
preoccupat ion with China and events in southeast Asia, probably while
yon were away from the room.
Al N. KELLY. 1 W011-1(1 rind It hard to believe it.
Al r. STOESSEL. 1 think we feel, 01[1' :11110S feel that Ii inois are MOV IM,'
in Eastern Europe. Ulm: are mov IR"- t Soviet Union. They have
been Lou numb,, of years. That it would lie an incorrect- policy, it
would not be in our interest to cont Imo(' to elliphasize only the military
aspects of NATO. I hat now is the t ime to take ad vant ao-ie of some of
these other t hi tigs hat ;ire developing in Eastern Europe. All of the
eall it ries feel t hat way.
AUr. MoN-AGAN. Whitt is there tliat leads you to that conclusion ?
That is what we are Irving to find out.
MN. KELLY. 11 y011 Mint to say to us at this point that there are
things going oil? I hat there is something !roim, 011 there !lint von can't
tall,: about this morning., i will accept your st it einem. But I want
you to level with Me.
It her, is nothing going on. I hen I can't see what von are doina.it
for at this time. 1 C',1114( see why we should be taking t hese initiatives
riedu at this time.
1; Sironssii.L. I Hie to keep reiterin ing tins. but I tliiiik t his is not it
ic chit wre in our policy. This East-West (rule legislai ion was under
consideral ion in tlie execut iii' ltranch hist year., was sent lip to the Con-
in t he si wino: of I his year-- -
Ai K ELIA. Voll are alking- about reciprocal trade
Ai ii.SToEssEn. The most-favored-nal ion I rent ment
Rtit.tv. The President doesn't need that for what you ;Ire d0H(r
rit It -now. I 10 doesn't t wed t lie 1101 1011 of the Congress for what you
e done wit h our export control lists, with Export -1-M port Bank
policy. and so 011.
Mr, STi ES.'`.,.EL. I was j11A ILV111!..): to 1)0110 0111 the Iii lI5 thnt the
1LNiiieilt has listed here, most of them are not now in I toir essence or
I'onee1)1 ? rifileY Int \ie 'wen I liInS 1it we Iliwe Lee" "()rking on for
some time.
There is, I t hink, a feelinpi shared by most observers ; hal there is a
(ert un ferment, there are things moving in Eastern Enlope and in tile
So? let I-Ilion.
THir trade is goitor up. There is more interest in a consumer-
oriented economy. We feel, our allies feel, flint it is t inn, to take ad-
III ill of this.
Airs. REt.t.v. Py this act ion are you proposing to do anything with
the Trading With the Enemy Act?
Mr. GREEN-w.kt.n. It doesn't affect the Trading With I he Enemy .ket,
or trading with Communist China.
Mrs. KELLY. 1 have one further question to ask of you : Why weren't
I he Soviets invited to submit a proposal for an examination of moon
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particles when we obtain them? We have offered this to other coun-
tries. Why did we ask 50 other countries to submit proposals on how
they would analyze these particles and what they would do with their
findings ? Why wasn't the Soviet Union invited to participate in that
program if we are trying to "build bridges" to the East?
Mr. SToEssim. I am afraid I can't answer that, Madam Chairman.
I am not familiar---- -
Mrs. KELLY. Is anyone here familiar with that subject?
Mr. Giu