PROPOSED REVISION OF FOREIGN SERVICE REPORTING INSTRUCTION ON ECONOMIC RELATIONS WITH THE SINO-SOVIET BLOC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01203A000200240003-5
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 33
• Document Creation Date: December 9, 2016
• Document Release Date: June 21, 2000
• Sequence Number: 3
• Publication Date: December 5, 1955
• Content Type: REPORT

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State Dept. declassification & release instructions on file
PROPOSED REVISION OF FOREIGN SERVICE REPORTING INSTRUCTION
ON ECONOMIC RELATION S WITH THE SING-SOVIET BLOC
EDIC Working Group on Collection Requirements
(December 58 1955)
220 ECONOMIC RELATIONS WITH THE SINO?SOVIET BLOC
221 wcopa of Subchapter
Subchapter 220 is concerned with the definition, purposes,, and coordination
of Foreign Service reporting on trade and other economic relations with
Sino-Soviet Bloc countries. A description of the major reports required
in these categories and suggested guides to be used in their preparation
are also included?
222 Definition
For the purposes of this subchapter, the Sino-Soviet Bloc is defined as
including Albania, Bulgaria, Czechoslovakia, Soviet Zone of Germany,
Hungary, Poland, Rumania, U.S.S.R.$ Communist China, North Vietnam, and
North Korea Coverage on Formosa, Macao, and Hong Kong is also of interest
because of the close trading relationships of the latter two localities
with mainland China, and because of the practice of some countries of
including all three of tese areas with mainland China in foreign trade
statistics{,
223 Ac "User's and Purposes
223.1 Principal Participating :pencies, Groups and Countries
Foreign Service reports on the economic relations of free world
countries with the Sin.-Soviet Bloc are principally used by those
departments which have operating and policy responsibilities in
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the field of economic defense, especially Commerce, Defenses ICA,/MDAC,
State and Treasury{, Under the direction of the Secretary of
State, the Director of ICA (through his Deputy Director for MDAC)
has special legislative responsibility for administering the
Battle Act, including its termination-of-aid provisions and the
coordination of all activities of the United States Government
which concern security controls over exports from foreign
count?ieso The Departments of Commerce and Treasury have primary
responsibility for administering, respectivelyp United States
export and financial control legislation. The Departments of
Defense and State are concerned with economic defense because of
their general responsibilities, respectively, for the national
defense and the conduct of foreign affairs, In addition to these
operating and policy agencies, the ''Alashington intelligence
community is an important ends-user of much of this material received
from Foreign Service posts,,
United States economic defense activities are coordinated
through the Economic Defense Advisory Committee (EDAC)o Under EDAC,
which includes all agencies having significant responsibilities in
the field of economic defense,, a number of working groups and sub-
committees coordinate the essential functions of the program under
the general supervision of the EDAC Executive Committee,
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International coordination in controlling trade with the
Sino Soviet Bloc is effected in Paris through the Consultative
Group (CG) and its two subcommittees, the Coordinating Committee
(COCOM) and the China Committee (CHINCOM)o This organization
consists of fifteen member countries: Belgium, Canada, Denmark,
France, Greece, Italy, Japan, Luxembourg, the Netherlands, Norway,
Portugal, Turkey, the United Kingdom, the United States, and
eldest Germany. Other free=world countries cooperate in varying
degrees, often by bilateral arrangement,,
223,,2 uses
223 0 21 General
Reporting on economic relations with the Bloc provides the
sine qua non for meeting the responsibilities described
above.. Through informative Foreign Service reporting, the
EDAC agencies are enabled to Judge the suitability and weigh
the cost of actual and proposed economic defense programs
and measures., For this purpose, they require information
and analysis as a basis for evaluating the total impact
of such programs and measures on both the Bloc and the
free world,
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(22302 Contfld)
223022 Economic Defense Objectives and Programs
The basic objectives of United States foreign economic
policy relating to economic defense area
a.. To limit or retard the growth of economic war potential
in the Sino-Soviet Bloc, and
ba To increase or maintain the relative economic
strength of the free world.
It is evident that the accomplishment of these objectives
depends in large measure on various policies and programs
within the free world, including United States foreign trade
policy and the mutual security prof,ram?
Within the scope of economic defense legislation and
administrative orders, these objec.ives are carried out
through a number of interrelated programs, which are
changed from time to time to =meet new conditions. Existing
economic defense programs may be described conceptually
as follows:
a. Commodity trade controls over exports and imports,
b0 Ancillary controls over transit trade (e.g., IC/DV and
TAC cyst ,transportation se:-vices (e.g., voyage
licensing controls), ownership and use of financial
assets, transactions and/or financial operations, and
release of technology,
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c, Consultations and mutual assistance among freeworld
countries aimed at preventing or reducing economic
domination or penetration by the Sino.Soviet Bloc.
Commodities subject to strategic export controls are
enumerated in various lists, multilateral and unilateral.
The International Lists, agreed to by COCOM and CHINCOM,,
include International List I (with its Munitions and Atomic
Energy Annexes), Lists II and III,,and the China Special List.
All items on the lists just named are embargoed to Communist
China and the Asiatic satellites by the fifteen participating
countries o With respect to the USSR and its European
satellites, International List I is embargoed, List II is
under quantitative control and List IXI is merely under
surveillance,, The International Lists have been transmitted
informally to certain "third countries" cooperating in CG
control arrangements,,
The Battle Act lists, also relating to the control of
strategic exports from other countries to the Bloc, are
transmitted to all aid-recipient governments and generally
to other friendly countries when these lists are issued
or revised,, The Battle Act Title I list (Categories A and B)
is identical in coverage to International List I (with its
Annexes) while the Title II list is identical in coverage
to IL II and III,, -
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(223.y2 Contad)
Although not establishing an additional international
list, the UN General Assembly Resolution of May 18, 1951,
called for a strategic embargo applying to Communist China
and North Korea of arms, ammunition, and implements of ware
atomic energy materials, petroleum, transportation materials
of strategic value, and items useful in the production of
arms,,, ammunition and implements of war., UN members in
responding'to this Resolution in many instances listed the
items to which they would apply the embargo?
The national export control lists issued or published
by individual. countries in implemw~nting international
agreements or in carrying out their own unilateral controls
vary in character and format, covering strategic items in
general categories (e.g., tariff or statistical classifications)
in some instances, and providing specific listings or
definitions in others,
The US Master Export Security List (MESL) entamerates
strategic items under US export control. It includes the
International Atomic -nergy and 6:unitions Lists, International
Lists I, II and III and the list of items controlled
unilaterally by the United States,
2302,3 Speekft 0s s
The individual economic defense programs described above
require special types of reporting;, For example, reporting
which relates to the supply position, ;including trade, of
-.6_,
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the Bloc in various commodities is used in the determination
of commodity controls and for negotiating changes in the
multilateral lists with other governments. It is also
essential in determining the net advantage of individual
trade transactions and agreements proposed or effected
between Bloc and free world countries. General and specific
information on East-West trade transactions is used, in part,
for the enforcement of existing trade controls,, and for the
modification of such controls whenever necessary to fill
loopholes or meet changed conditions. Together with reporting
on the trading tactics and other external economic operations
of the Bloc, it is used for a variety of additional purposes.
These include the determination and international negotiation
of measures as necessary and appropriate to prevent or combat
Bloc economic penetration and domination of free world
countriesa In a similar way, reporting on Bloc use of free
world shipping, credits, and so on is needed for the determi-
nation and negotiation of ancillary controls, and for their
enforcement and modification as appropriateem i
7,
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Coordination o f ort letivS t .es~
Certain
information on economic relations between the
Bloc and the CG countries, in particular, is contained in CG/COCC?VCHINCOM
documents and i n communications from the United States delegation, i ?',
CG/COCOM/CHINCC . In the into rests of adequately informing the EDAC:
agencies and their overseas representatives, and to minimize unnecessary
rer;eivin
duplication, pests --eaea ;;,ice CC/COCOM/CHINCal documents and
should scrutinize them
communications from the United Skates deiegatic / in orde., to determine
what areas and items of infory,it s.on should be reported or amplified.,
not only to W4aszington but to the United :Mates delegation or to other
posts.; Reporting on East-West trade should also be closely coordinated
with the other Interested dl tw at the post,.:s.ncludint the Department
of Defense attaches
225 Nature o ? or? ng ern Econor i U? Relations with the Bloo
Reporting on this subject presents unusual problems, for two principal
reasons~ First, economic relations with the Bloc are st i generic
ondiy, the farts are often hard to get., identify or :..nterpretr.
Foreign trade is a government monopoly in Bloc cou?.tries, and is
:motivated by political., military and psycholo;ic_l con-jiderations in
&:.ddition to the purely #-;ornrnerciai factors which are normally controlling
in the s^lestern World ry
ux thermorel, the Bloc maintains a long-standing policy of secrecy,:,
Information on a great variety of Bloc economic activities is systematically
_..-. thheld or mis:?.eading3y presented. Besides obstructing normal foreiLm
trade, this economic secrecy makes reporting both tricky and difficult.
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The reporting officer, therefore, should be especially alert
and assiduous in digging out and verifying the facts, cautious about
accepting statements at their face value, and critical in interpretation.
Specific descriptions of information sources, and estimates of their
reliability, should be given as a matter of course,
226 Reporting Guides
Foreign Service reports on economic relations with the Soviet Bicc will,
in general, fall into the categories of repetitive statistical reporting,
periodic appraisals of significant developments-in the economic defense
and related fields, and the submission of information on outstanding
current developments as they take place or are anticipated. These reports
will generally be requested under Sections B. C and ofsthe ectively ~ e post 's
CERP, In addition, "spot" requests may emanate from ylashington on certain
subjects not included in CERP, and reporters in the field should, at
their own discretion, submit voluntary. reports on subjects in this field.
General definitions of these types of reports are included in 3 FSMII 0209
and more specific guidance in the preparation of these reports is given
below:
226.1 Repetitive Statistical Data on Trade with Countries of the Soviet Bloc
The Department of Commerce compiles matrix tables in value terms
and detailed commodity tabulations in quantity and value, of all
trade with the Soviet Bloc countries, using as a basis the published
and unpublished data submitted by posts in compliance with
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Section B CERP requirements. In general, these requirements
may call for submission of one or both of the following reports:
Monthly Value Totals
1, Total value of monthly trade with all Soviet Bloc
countries.
2. Total value of monthly trade with individual Soviet Bloc
countries.
3. Data in 1 and 2 should show value of domestic exports,
re-exports, and imports.
Monthly,, Cuarterl or Semi-Annual Commodity Detail
to Volume and value of exports to separate Soviet Bloc
countries by major commodity listings,
2. Volume and value of imports from separate Soviet Bloc
countries by major commodity listings.
3. Trade data on those commodities which appear in Title I
and Title II Battle Act lists are especially desired.
(note - Posts in countries whose Governments participate
in CG/COCOM/CHINCOM should correlate these data with the
statistics covering shipments of International Lists I and II
items which are submitted to COCOMO
4? Coverage should also include available data on transhipments
to or from the Soviet Bloc,
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(226 Conted)
S'lherever possible posts should transmit cortmodity details
following the Standard International Trade Classification
system as employed by the United. Nations to enable
1,,'-ashington to compare international trade reporting
(see 3 FSM II 517), although portions of this list will
not be applicable to certain countries.,
226,:.'2 Semi-Annual Revi.e
Certain posts are required to submit, on a semi-annual or annual
basis,, analytical. reports on economic relations with the Soviet
Bloc as required under Section C of CERPO The essential aim% of
these reports is to obtain the posts considered analysis and
appraisal of developments in this field during the period under
review., J'~~7etailed information already reported to i%ashinyton
should not be reheated but should be incll..acled by reference to
previous co .munlcations , Of the more significant developments
to be reTiew d, some are common to all countries, while others
will be a Product of a covntry3s peculiar noiitico-econoric
factors arid. circ.mis .an eso The followin general outline is
offered as a uide, although posts need not comply with the order
in which the various topics appear, nor need they address themselves
to each 3ubtopic listed? Those listed indicate, but do not exhaust,
t"aye eub`.,opi_cs which could be of silni.fict.nceo With respect to
items A -.hrough Ca which refer to developments common to all countries,
posts aro requested to point out when there has been no development
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or change therein, if this has been the case, rather than to
ignore the topic completely,
~~
A'?In addition to these periodic reports, all posts are
encouraged to submit analyses, on their own initiative, of
major developments they occur in economic relations with the
Sino Soviet Bloc
A, U?S. Negotiations and Problems Confronting; the Post
B. Attitudes of Host Country
1. Governmental attitude toward trade with the Bloc.
2. The Government?s view regarding the level of export
controls, and the aims and extent of its participation
O'`'' or its cooperation under the Battle Act.
in COCOMR CHINCOP4/
3, The direction of business and press attitudes, and other
C. Strategic Export Controls and their 2lication
1. Q+)evelopments in control regulations,
2. Analysis of exception cases,
3. Battle Act problems.
4.. Diversions a
D., East-West Trade
1. The Bloc?s (or a particular Bloc ountry?s) apparent
intentions or tactics regarding trade with the local
country.
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26 Analysis of significant changes in the volume and
content of trade with particular'Bloc countries,,
3. Significance of East-West tradeb or aspects thereof,
in relation to total trade.
4,, Impact upon the economy of the local country of
restrictions on exports to the Bloc.
5,, Price changes,,
6. Status of payments or clearing balances, and the
use of short or longterm credit,,
76 Trade agreements negotiated with 3loc countries,
and significant items,,
8,, Trade fairs and delegations (see 3 FSM II 67O).
E. Other Outstandin; Developments or Lik,,;ly Shames
22663 Alert List Reporting
Post should keep Washington fully informed of significant
developments in the field of economic relations with the Sino-
Soviet Bloc,, The following are character-istic of the subject
material that should be included under SoctionD(Alert List)
reporting:
ab Commodity Controls
(1) New commodity controls or control regulations adopted,
or the modification or dropping of existing controls,
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(226 Cont Rd)
(1) New control regulations., laws or decrees adopted, or
the modification or dropping of existing regulations,
laws or decrees relating to the application or
enforcement of security trade controls.
(2) Shipment of Battle Net Title I and 1:: items from the
country or in transit through the country to Bloc
destinations or likely transshipment points.
(3) Significant casemof diversions or clandestine shipments,
direct or indirect, of strategic co nrnodities,
particularly those of United States origin or subject
to TAC controls.,
(4) Any apparently new trade routes established for
shipments to Bloc countries originating in or passing
through the country; names of shipping lines or airlines
using transit points within the country; new transit
facilities or f. orwarding firms,
(5) Security trade control cases which involve or call
for administrative action.
(6) Information regarding
United States nationals,, firms
abroad (including visits of United States registered
vessels and United States aircraft) participating in or
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facilitating the shipment or transshipment of
strategic commodities to Bloc countries or likely
transshipment points, Other information regarding
United States nationalsfirms or affiliates with
respect to their possible addition to or deletion
,from the BFC Special Check List:.
(7) Bloc efforts to develop sources of supply for
strategic list commodities,
c. Trade Pattern and Composition
(1) Significant changes in composition or pattern of:
trade with any Bloc country or with Bloc as a whole.
(2) Significant increases of essential or critical
commodities imported from or exported to Bloc
countries; unusual Bloc purchases or wee,,
(3) Trade agreements with Bloc countries (see 226.41
Guide for Special Reporting).
(4) Follow-up information on fulfillment of trade agree-
ments., placing of contracts, delivery,' delays, and
status of fulfillment of long-term commitments, under
trade agreements.,
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Other ZxtmYja- fconomi.~a Activities of jh( B
(1) Bloc economic penetration, particularly in less
developed areas - through offers of equipment
(especially on a gift or loan basis)' or technical
or financial assistances followsup on implementation
of offers.
(2) Bloc economic penetration particularly in less
developed areas, through sale of Bloc exports at
lower-than-world market prices, or purchase of
imports at higher-than-world market prices,
(3) Bloc efforts to develop new sources of supply,
(4) Purchasing by one or more Bloc countries of large
proportion of specific commodity exports from
individual. free-world countries (especially of
(5)
country?ss surplus commodities).
Actual or attempted penetration or control of
business firms, particularly those acting as agents
for strategic products of United States manufacture
and known to be sympathetic to the sale of strategic
materials to the bloc, known to have engaged in such
trade, or believed to have connections with Communist
Party or Bloc agents.,
-1.6_>
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(226 Cont ? d )
(6) Trade practices of Bloc countries (negotiating techniques,
terms of trade, etc,), especially those of which the
host country is critical,
(7) Examples of difficulties of trading with Bloc countries,
their unreliability, delay, or non-fulfillment of contracts,
poor quality, complaints, etc,, especially complaints
voiced by free world businessmen or government officials,,
(8) Middleman activities of the Bloc in international trade
transactions,
e. Balance of Payments Items
(1) Credits and loans and offers of credits and loans granted
to and/or extended by the Bloc, including details of fee
forld government credits and guarantees of private loaned
(2) Bloc deficits and credits outstanding, including status
of clearing accounts under trade and payments agreements.
(3) Sino-Soviet Bloc freight and other service payments to
and receipts from the free yorld.
(4) Gold movements and sales involving Bloc countries,
(5) Bloc use of dollars and sterling in trade with the test
(e.g,,, the use of these currencies in settlement of
imbalances under trade and payment agreements, in evasion
of controls, etc,,).
(6) Changes in Bloc assets in the /ree /orld, particularly
changes in bank balances.
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f. Trade Fairs and Delegaetions
(1) Participation by Bloc countries in trade fairs or
expositions (see 3 FSM II 670)0
(2) Bloc trade and other economic and technical delegations
and their activities and contacts within the free world,
ge Transport and Communications
(1) Construction and sale of vessels to Bloc countries,
including the reason for the sale (e.g., trade agreement
commitments, special barter deal) and as much detail as
possible concerning specifications (i.e., type of vessel,
tonnage, speed, etc.), (see 3 FSM II 572).
(2) Repair of vessels for Bloc countries,
(3) Chartering of vessels to Bloc countries, including available
information on middlemen and Bloc agents.
(4) Construction, sales, repair, and chartering of aircraft to
Bloc countries,,
22644 Guides for Special Reporting
226.41 Trades snd Palrrnents Agreements With the Soviet Bloc
Detailed information is required on bilateral trade and
payments agreements that may be entered into by non-bloc
and Soviet Bloc countries. In general, the following
information is desired in order to (a) administer the
commodity embargo and control provisions of the Battle
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Act; (b) to appraise the relative bargaining positions
free world
of the/t countries; (c) to anticipate any Bloc
demands for strategic materials and the ability of the
free world
/Weabom countries to withstand these demands) (d) to
help anticipate the general trends and patterns of the
trading partners; and (e) to app riase Bloc trade offensivesq
especially in-non-European areas,
a. Information should be submitted, as available on
forthcoming negotiations, the date and place of
negotiation, and the anticipated major problems,
Important information on the progress of the
negotiations should be submitted by cable.,
ba Summaries of the agreement should be forwarded in
reproducible despatch form as soon as possible, with
text and schedule attached if available, The form
to be used in preparation of this summary is shown
below. The texts and schedules of the agreement
should be obtained and forwarded as soon as possible
under the same code,; If not available upon submission
of summary,the postlshould note the efforts being made
to obtain and likelihood of procuring copy.,
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(226 Contad)
Form for Trade Agreement, Protocol, or Supplement Summary
I,. Parties to Agreement,
2, Source of information; also notation of most detailed
published references if available,
3. Duration of agreement,
4a Date of previous agreement and whether current
agreement replaces it completely (thus new agree-
ment), constitutes new schedules for exchange with
same terms (thus protocol) or merely supplements
list of commodities to be exchanged (thus supple-
ment); also relationship to any long-term agreement
in effect between countries concerned?
5o Denouncement and renewal provisions,
6. Principal commodities for exchange (in metric tons
or units and value) with delivery dates if extended
longer than one year,
free world
(a) Exports from/: Country,
free world
(b) Imports to/',- Country,
7, Foreign trade value summary,
8. Special provisions.
9, Analysis (may be submitted separately);
Free world
(a) / or Bloc satisfaction or dissatisfaction
with the agreement as signed.
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(b) Post's assessment of relative advantage to
the free world
/, including the degree of economic
dependence on commodities to be received and
the impact of a possible dislocation in the
traditional exchange of goods?
(c) Any indication of coordination among Bloc
countries prior to or during negotiations.
the free world
(d) Specific examples of way in which/ is (if
true) at disadvantage in bargaining with the Bloc
(e)
(1)
country.
Any pertinent comments on prices, Bloc offers
of premiums, etc.
Indications of particularly strong Bloc interest
in specific commodities (whether or not commodity
exchange as shown by Bloc offers to pay higher
prices or give better terms) with any explanations
free world
offered bykewbem negotiators or surmised by post.
Form for Panent:s A&reement or Provisions
L Date of signature (if modification, indicate date of
original agreement and previous modifications)*
2. Denouncement and renewal provisions.
3. Exchange rate provisions.
14. Payments covered.
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(226 Cont o d )
5. Method of clearing:
(a) Currency in which accounts are kept,
(b) Banks,
(c) Interest,
6, Frequency of clearing,
70 Overdraft provisions (swing or other, long or short-
term credits),
8, Final settlement (currency,, merchandise, period of
time).
9. Use of dollars or gold (as compared with previous
agreement).
10. Other provisions,
lla Post comments (may be submitted separately), including
information on the transfer of clearing balances from
previous agreements,
c., Follow-up information should be submitted on contracts
actually placed under the trade agreements, difficulties in
fulfilling commitments, Soviet Bloc delays in delivery,
complaints about quality of goods delivered by the Soviet
Bloc, overfulfillment of quotas by other side., Information
revealing status of fulfillment of long-term commitments
is especially needed,
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(226 ContQd)
226.42 Status of Securiontrols Exercised by Foreign
Governments
The United States Government agencies which mare the
responsibility for administering economic defense
activities under the Battle Act and the Security trade
controls of the United States over its own economic
relations with the Sino?Soviet Bloc require as complete
and up to date a picture as possible of the security
trade controls maintained by other free world governments,
Essentially, this picture consists of what each
government can do, at any time, within the limits of its
legislative framework,, Whenever a case arises which
calls for a United States approach to the appropriate
authorities of another government ? it may be with respect
to an impending export from or transshipment through
that country, or to a shipment of U.S. origin, or to the
transfer of a U.S. ship or commercial airplane - it is
necessary to be able to know what it is possible to
expect or ask the foreign government to do. It will be
noted that this Section is concerned with the reporting,
not of "diversion cases", or with other attempts of
national to avoid any of the various kinds of controls in
question, but with the reporting of the nature and scope
currently
of the security controls/ w; in force. In general
,kre
these controls may be placed 4 /#dr c tegories: (a) the
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"41 hip-mb#-
export (including re-export and/transshipment) of
strategic commodities; (b) the export of technical
date;(c) controls over shipping and air transports
(d) ?1-4- tx~ada- th-- i no-Soviet
a
Such reporting provides basic information. required in
diversion control and enforcement activities,, Information
on controls of aid-recipient countries must also be
reported to Congress under section 302(b):of the Battle
Act,
A. Security Controls Over the Ex ort of Strategic
Commodities
In general, the controls imposed by foreign governments
over the exports of strategic commodities fall into
commodity-destination controls (export licensing
controls, destination controls as exemplifl.ed by the
IC/DV system, and transshipment and transit controls
as exemplified by the TAC system) and financial controls.
to Cormnodity and Destination Controls
It is essential to have information on:
(a) The legal basis for existing control measures,
or for possible future extension of security
trade controls, including important adminis-
trative regulations,
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(b) Significant changes in export policies over
trade with the Sino-Soviet Bloc, including
changes in the lists of items subject to
control, and whether subject to embargo,
quantitative limitation, or surveillance only.
(c) Significant alteration in such control
procedures as preshipment screening (including
end use checks in the field), import
certificates or import permits, exporters?
declarations and delivery verifications,
(d) Changes in and effectiveness of enforcement
measures,
(e) Changes in control over re-exports. This in-
formation is required in connection with the
licensing of exports from the United States to
areas where re-export controls may be inadequate
to prevent diversions to unauthorized
destinations,
(f) Controls over in-transit shipments. Evaluations
would be helpful in regard to (1) the need for
additional controls, (2) the possibility of
securing the local government's cooperation, and
(3) the probable effectiveness of such controls
if instituted. Reports on the implementation
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(226 Cont?d)
(g)
and effectiveness of the Transit Authorization
Certificate Scheme are requested
Developments in connection with the
requirement of some (~dountries of the issuance
of import licenses to insure that goods in
question are consumed domestically and are not
re=exported to undesirable destinations;
information regarding; import controls imposed
for balance of payments reasons which might be
utilized to serve a security purpose?
20 Financial Controls
(a) Has %round Informata:on
The United States Government through the
Foreign Assets Control Regulations administered
by the Treasury Deportment has blocked the
assets in the United States of Communist China,,
Tibet, and North Korea and their nationals
and prohibited unlicensed dealings involving
property in which Communist China, Tibet, or
North Korea or their nationals have any direct
or indirect interest, Thus the regulations
prohibit the use of United States financial
facilities by these countries and their
nationals, e.g., the issuance of a United
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(226 Cont?d)
States dollar letter of credit by a United
States or foreign bank in connection with the
financing of a shipment of merchandise, whether
or not strategic, from anywhere in the world to
Communist China, Tibet, or North Korea. These
regulations also prohibit the unlicensed importa-
tion into the United States of goods of Chinese
Communist, Tibetan, and North Korean origin and
Chinese type merchandise. Agreements have been
entered into by the United States Treasury
Department with several foreign countries under
which they may issue certificates to the effect
that certain Chinese type commodities allegedly
produced in those countries are not, in fact, of
Communist China, Tibetan or North Korean origin.
Chinese type merchandise covered by such certifi-
cates of origin is authorized to enter the United
States under a general license contained on the
Foreign Assets Control Regulations?
The Treasury8s transaction control regulations
prohibit Americans, including foreign subsidiaries
of United States firms, from participating in
the purchase or sale of certain important commodities
for ultimate shipment from any country outside the
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Sino-Soviet
the United States to the countries of the/
Bloc. These transaction controls are complementary
to. the United States export control laws
Pertinent regulations of the Treasury
Department were transmitted to Foreign Service
posts by the Department?s circular instruction
of January 26, 1951 and February 9, 1951, entitled
"Foreign Assets Controlt? and (insert dates of
later transmission of amended FAC Regulations and
Transaction Control Regulations),;
(b) Information Re2uested Z
Information on the following subjects should be
submitted to Washington as soon as it comes to
the attention of reporting officer:
(1)
Possible violations of the Treasury Department
Foreign Assets Control and Transaction Control
Regulations. For example, information is
requested regarding any shipment to the United
States of goods of Communist origin (or of
goods mixed with goods of Communist Chinese
origin) the origin of which may be improperly
certified in violation of agreements undertaken
with the United States,,
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(226 ContUd)
(2) Any formal or informal measures adopted by
other governments for reasons of security to
keep under surveillance or to control financial
transactions involving trade with Sino-Soviet
Bloc countries.,,
(3) Any other information that may pertain to
the balance of payments position of Bloc
countries,, such as data on the shipping account
of the Bloc?s balance of payments(in cooperation
with 3 FS( ii 16o).
B., Security Controls Over the Export of Technical Data
For some time the United States has subjected to control
the export of industrial and technical data (e.g... blue-
prints of`technical processes) to Sino-Soviet Bloc
destinations, and licenses for export of any data of
a strategic character have been denied. Foreign Service
posts should be alert for possible evasion of these
controls over technical data of United States origin,
and should report promptly any cases which come to
their attention involving the export from their area
to the Sino-Soviet Bloc of strategic technical data
of son-United States origin. In this instance the
following information is desired on a continuing basiso
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(226 Cont9d)
L Formal or informal action by other governments
designed to protect industrial or technical data
of a strategic nature, such as censorship, export
controls over technical infortaation, voluntary
programs involving cooperation of industry,
restriction of publication of government infor-
mation, patent security., etc,,
2. The attitude of government officials and
individual industrial firms toward international
cooperation in the field of security controls
over technical data,.
Reports should stress any disadvantages associated
with measures proposed or-undertaken from the stand-
point of the need for dissemination of technical data
within free countries as compared with the security
advantages of insuring denial to the Soviet Bloc,
Cr, Security Controls Over Shipp:.ng and Air Transport
In most countries, controls over the sale and transfer
or registry of ships and aircraft are separate from
the controls over other strategic items. The legislative
authority basic to such controls is usually different,
having been adopted mainly for the purpose of develop-
ing and maintaining a national merchant marine and
air service., Thus the controls are normally adminis.
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(226 Conted)
tered by the agency having responsibility for
shipping or air transportations In the case of the
United States, for example, the.Shipping Act of 1916
provides the basic legislative authority for controlling
the sale or transfer of United States ships, and the
United States Maritime Administration administers the
controlso Since these controls are also applied for
security purposes, it is desirable for posts to be
aware of these separate arrangements in reporting
on the status of security cortrolse,
In addition to controls over sales (iaeos change
registry
of ownership) and transfer of (i,eo, change of
flag or export), many countries maintain some kind of
control over chartering of national flag vessels,
especially tanked, to Bloc entities. In the United
States, the basic control regulation is General Order 59
revised, of January 22, 1951, issued by the Maritime
Administration under authority of the Shipping Act of
1916. In most countries, however, such controls over
chartering as exist stem from controls over the currency
aspect of the contract,
A third type of security controls affecting
shipping is that governing the cargoes that may be
rried to the Sino-Soviet Bloc o United States ships
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(226 Cunt "d )
(and aircraft) are prohibited under the terms of
Transportation Order T?1 of December 89 1950 from
carrying any United States Positive List item to a
Soviet Bloc port (if the item is of United States
origin) unless it is properly licensed or unless
perrnission has been received from the Under Secretary
For Transportation of the Department of Commerce?
Transportation Order T=2 of December 16p 1950 prohibits
United States ships (and aircraft) from calling at
Chinese Communist ports or from carrying anywhere in
the world cargoes destined for Communist China, Other
governments which participate in COC( have comparable
controls (voyage licensing, etc.) which prohibit their
flag vessels from carrying embargoed items to Communist
China and North Korea,, unless permission is first
obtained from the respective Governments,
In addition, information in this field contributes
to the effective implementation of the Department of
Cormrrerce ? s bunkering controls and the licensing of other
ships" stores to vessels of foreign registry., as well
as the bunkering controls administered by the Department
of the Treasury under its Foreign Assets ControLs,
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(226 Cont?d)
In order to administer United States controls
in these fields and to seek the cooperation of ether
governments along these lines, including the partici-
pants in COCOM, information on the following suljects
is rec,uired on a continuing basis.-
L, The legal basis and existing regulations providing
for controls over shipping and air transport
operations, including controls over sales, transfer
of registry, chartering, and carriage and bunkering
controls
2? The administration of such controls by foreign
governmentso
3-, Any developments indicating a change in government
policy regarding security controls over shipping
or air transport operations,
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