REPORT OF ADVISORY COMMITTEE ON EXPORT POLICY MEETING NO. 2(57) HELD JANUARY 25, 1957

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00014A000100120005-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: July 11, 2000
• Sequence Number: 5
• Publication Date: February 15, 1957
• Content Type: REPORT

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REPORT OF ACTION NO. 37
*DOC Exempt Letter On File*
To: Members
Advisory Committee on Export Policy
From: Executive Secretary
Advisory Committee on Export. Policy
Subject: Report of Advisory Committee on Export Policy Meeting
No. 2(S7) held January 25, 1957
Marshall M. Smith, Chairman
Forrest D. Hockersmith, Director
J. Mis hell George
Aaron Toll in
John D. Garrett,, Executive. Secretary
Nathaniel Knowles
Thorsten V. Kalijarvi
Capt. W. B. Thorp
Adm. W. S. DeLany
Malcolm Slaght
Frederick Jinant
Morris J. Fields
Patrick M. O1Leary
25X1A9a
L. A. Fox '. ..
Herbert, Heberlirig
tdrard Rankin
John ,Delaney
G. P. Elliman
Douglas Henderson
Stuart D. Nelson
Carroll Woods
Harold A. Levin
25X1A9a
Agenda
Export Policy Towards the Satellites of the U.S.S.R.
(ACED Document No. 128 and OC Document No. 1314)
Commerce
Commerce - EPS
Commerce - EPS
Commerce EPS
Commerce
Commerce (BFC)
State
Defense
MDAC.
ICA
0DM
Treeeury
Agriculture
CIA.
Commerce - BFC
Commerce - B29A
State
State
State
MOPC
CIA
CIA
Commerce - BFC
Commerce :- BFC
Commerce - BFC
COMM-DC 4402
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Export Policy Towards the Satellites of the USSR
ACEPDocument No, 128)
PROPOSAL
The proposals from the Export Policy Staff (OC Document No. '1311.) set forth
below were discussed at the Operatirig'Committee meeting "on January 10., 1957.
A. With respect to policy conclusions,. accept the followings
1. Although of limited possible influence, relaxation of U.S. export con-
trols should be used to help implement current U.S.:policy toward the
satellites of the USSR.
2. In the past the use of U.S.' differential export controls toward Fin-
land and Yugoslavia have been of assistance in maintaining the rela-
tive independence of those states from the USSR and have offered
examples to other satellites to seek their own independence from
the'USSR.,
3. Differential trade controls alone can be helpful iri'the same way with
respect to"'current satellites of the USSR but are of limited value if
not accompanied by comparable changes in other' aspects of U.S. foreign
economic. policy toward the satellites,
It would be helpful to formulate in advance general guides to assist
in making promptly rational determinations 'as to' relaxati
f
on o
c n-
trols as conditions warrant.
5. In considering relaxation of controls toward a satellite, particular
consideration must be given to the impact of any such proposed relaxa-
tio:I on (a) the U.S. public and Congressional opinion 'and (b) the
remaining controls toward the Soviet bloc and communist. China as
exercised by CG members and other cooperating countries .
6."`Grouping of satellites with the USSR in Sub-Group A for both external
and internal control purposes, is a device to reflect. policy judgments
and to permit simplicity of administration. There is leeway in the
degree of. such association and that leeway 'can and. should be used as
appropriate to reflect any significant policy needs.
7. Reasonable leeway exists for U.S. relaxation of its unilateral con-
trols over. strategic goods toward the satellites. Various alterna-
tive courses of action must be devised to meet.the needs of changing
conditions and policies. Since security risks involved are serious
in nature, such action should be-taken only after a full review of
the circumstances and issues involved.
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Reasonable leeway exists for relaxation of U.S. unilateral controls
over nonstrategic goods to the satellites. Since only modest risks
are involved and substantial gains possible, favorable consideration
should be-given to relaxation for qualifying satellites.
9,' 'It would be helpful if guides were devised to assist in delteinining
the USSR
f
t
l
rom
e
y
when conditions warrant treating satellites separa
and in determining which of various possible degrees of relaxation in
U.S. controls'should be adopted with. respect to both strategic and
nonstrategic shipments to any satellite. (Attachment 3 to OC Document
No. l314)?
With respect to Poland, proposed that.
1. BFC be authorized to remove by appropriate device the requirement for
individual licenses for non-Positive List items with respect to
Poland.
2. If in the course of any general discussion with Polish officials con-
cerning U.S.-Polish relations it appears feasible to do so, try to
obtain Polish assurance that it will use U.S. goods received solely
for indigenous purposes and will not divert or reexport such goods
to the USSR or to other satellites (including communist China) of
the USSR.
3. Whether or! not the above official'assurance is obtained, BFC be
djust
d t
o a
.authorized to take the action set forth in 1. above an
existing General Licenses in keeping with the sp irit of that action.
BFC take the necessary steps through appropriate channels to provide
appropriate explanation of this action to the U.S. public, the appro-
priate committees of the Congress, the appropriate U.S. Missions
abroad and interested foreign friendly governments.
5-. BFC provide the USIA with all relevant information on'this problem.
RECOMIMDATIOId
The ' Chairman said he felt . the discussion had served a useful purpose.' With
respect to the recommendations in Part A. of OC Document No. 13114 relative
to policy conclusions, he felt that there was: general agreement and that the
guides set up in Attachment.3..to that document, and as amended in the meeting,
were acceptable for use in considering relaxation,of.U.S. export controls
toward any satellite of the USSR. With respect to the recommendations of
Part B. of OC Document No. 1314 relative, to Polandthere appeared to be
some divergence of views. He suggested, and State agreed, that rather than
recommend acceptance of the Commerce proposals, that State would prepare a
paper reflecting their views of the forthcoming U.S.-Polish negotiations and
setting forth the leeway which they felt necessary (with respect to U-a-expart
controls) and would make it available for consideration by the ACEP members.
SkEC
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If no one disagreed with those views, then, it would not be necessary to hold
another ACED meeting; however, if any agency would desire discussion of. such a
paper, he was prepared to call one quickly so that State would be in a posi-
tion to go ahead. _Additionally he felt State could start to negotiate with
the Poles with respect to a somewhat less restrictive U.S. export control
policy toward Poland. He said a determination cf the list of items and the
device to be used, i.e., GL to Poland or GRO,.could be determined at a future
date. 'He felt State could 'undertake. to negotiate on all non-Positive List
items but should check'with'the Operating Committee on C-III items on the
Positive List, bearing in mind. not only the strategic significance of the items
but the volume of trade and the method of financing. He said he assumed that
State would discuss assurances with respect to transshipment with the Poles
on the basis of it being a procedure folly red by the :U.S. with all other
DISCUSSION
The Director of the Export Policy Staff presented ACEP Document No, 12b ana ex-
plained the subject had been discussed, at au. Operating Committee meeting held
January 10th and he, as Chairman ,'had not made a recommendation as he felt it
should be reviewed by ACEP. He said that there seemed to be general agreement
that the guidelines' set forth in' Attachment 3 to X Document No- .1314 should
be accepted except that, at' State's suggestion, condition No. 9 should be
eliminated because if that condition prevailed, the country would not be a
satellite. He pointed out, that. in view of this, Attachment No. '3 to OC Docu-
ment No. 1314 shouldbe.:revised to delete condition No. 9 and move the X in
Step 4 of that condition to Step 4 of condition No. 10,. He reported that
State wished to move'to Step No.. 3 which would permit non-embargoed C-IV items
and C-III items on the .Positive .L.is t .to .be under General License to Poland -
within the conditions set by COCOM.. He explained that Commerce felt that as-
surances should be secured from Poland with respect to transshipnent.or diver-
sion-of U.S. ,origin goods before relaxing .control. and if -they couldnxt get
they' for all satellites, .they certainly should be ,secured for Communist China.
1'he Chairman, asked whether the Proposal was clearly within the provisions oi
NSC152/3 and the Director of EPS read from that document and all; agreed the
proposal was. consistent with that statement of policy.
The. Chairman said the.possibility" of transshipment from Poland to> the Sino
Soviet Bloc was an important problem to bear in mind. He referred to our
connnitments at COCOM and said it would be most, unfortunate if any substantial
amount of strategic material of- U;Sorigin found its way to those countries
via Poland as a result of relaxation in'U,S. control.
The Commerce member said BFC would feel
..tegic material to Poland unless assurihcesiwweeretreceived with respect tora-
transs'hipment to the Sino Soviet Bloc. He said he didn't know the type of
assurance that would be satisfactory but assumed that would be worked out
during negotiations,
The CIA member said-that certainly transshipment was a possibility and an
evaluation would have-to be made with respect-to this danger and the.advantage
U e U.S. . expected , tp gaini.,by? proceding with relaxation,
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The Chairman observed that it wasn t t know how Poland would pay for goods it
..secured under the relaxed control but it would be unfortunate if purchases in
soma.'. way were financed by the USSR, particularly if some of the items were
strategic.,
The State member explained that State had been endeavoring to evaluate the
risks of. relaxation. in controls with the possible advantage to the U.S. that
might be gained and feels that the U.S. should take what he termed a calcu-
lated risk by taking some steps towards relaxing U.S. export control; towards
Poland. He felt this was in line with NSC thinking and is one step towards
assisting, in the loosening of. Poland's ties to the USSR and he cited the de-
cision for making U.S. cotton available to Poland. With respect to negotia-
tions, he said State wanted some leeway while discussing various subjects
with the Poles. He felt State should be in a position to resolve certain
individual situations and recognized that if controls were relaxed and it
developed that results were"contrary to expectations, it would be possible to
back track. He indicated that State expected to discuss the transshipment
problem-but,he couldn't say how far they could go towards pressing the Poles
for assurances.. He felt it would be very unfortunate if the Poles must be
told that they must give assurances before any relaxation would take place,
adding that such a situation might entirely freeze the negotiations whereas
-the objective of the negotiations should be to get as much from the Poles as
possible. He pointed out he was only talking about Poland.
The Chairman observed that if controls were relaxed and the Department of
Commerce regulations were changed before negotiations, it would reveal "our
hands" to the Poles.
The MAC member indicated concern with respect to I/L I and II items and the
..State member said that he doubted they would discuss those items but rather
C-IV and C:III items on the Positive List as referred to on page 2.of ACEP
Document 'No. 128. He 'continued by saying that when he first learned, of the
proposal,, he was opposed to it; but after further study, felt that it was a
calculated ' risk :worth taking. He felt I/L I and II items shouldn't be.en-
tirely eliminated from considrration and maybe an Ad Hoc Group could be set
up for that purpose and 'deal `with each such item'on its merits.
The Chairman, pointed out that the proposal in the document is to decontrol
only all non-(Positive List items and he felt there should be'no announcement
of any relaxation until after the negotiations. He added . that. State wanted
leeway in the negotiations to go to Step 3, He stated9 however, Commerce could
not give the negotiations a "blank check" and if relaxation went beyond non-
Positive List items plus ~IV a ar.d b -items, it might conflict with the pro-
visions,, of the Battle Act and possibly the intent of the Export Control Act,
The State member said he was not requesting a "blank checks" or. "free wheeling"
.but he didn't want to have to say "no" to the Poles to anything they might pro-
nose but rather wanted to be able to agree to take any proposal under,.consider->
ation. He wanted the U.S'. negotiaticns to be as responsive as pcssjble to the
Poles and said some subjects might-have to be referred to an interagency group
and again mentioned that there is a calculated risk involved.
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The.:.MDAC. member said the calculated' risk isn;t.the.only consideration, and he
failed to ' find. any non-Positive List items on Attachment. 1 to . the. document '
that the U.S. hasn't-objected to PCs making a CHINCOM exception:. for shipment
to China; and in reply to a question from State, he said the Poles could'get
such material elsewhere and if the U.S. agrees to decontrol these non-Positive
List items to Poland, it should not object to having,them,made exceptions in
CHINCOM.
The State member pointed out that State's objective was to relax U.S.,,export
controls to Poland somewhat .beyond-the present regulations and of course.
,COCOM should be fully informed.
In reply to a question, it was'stated that USSR is extending credit to Poland
and the Director of 2S stated it is important?that.COCOM,be fully informed of
any steps taken.
The Chairman queried that itImight not be necessary to.put.all the non-Positive
List items on General License.
The Commerce. member said that virtually all of the non4Positive List items now
have a presumption for approval of individual licenseapplications to Poland
and by putting them under CL would have' a psychological advantage.by elimin-
ating the requirement for an export license. He felt some items, e.g, petro-
leum.items, might be retained under license control and safeguards could be
taken with respect to the' decontrolled items, such as. daily reports of clear-
ences'from customs; and added that all friendly countries had been requested
not to transship to the Bloc.
.In..reply to a question; the State member said it would be a mistake. to make
the "securing of assurances" a condition for agreeing to any relaxation but
thought if it were explained that it was a procedure, followed by the U,S_. with
all other friendly countries, the Poles might.agree but if they did, there
would be. 4 question as to 'how much implementation could be achieved.
The Chairman said the Fountain Committee must be consulted before long with
respect to 'any relaxing of controls in view of ? its . interest in transshipments
where regulations issued to prevent it eantt be enforced.
The Defense member asked if the Poles had indicated the nature of goods they
would' like to purchase from the U.S., `and.the State; member said they had not
but he expected it might cover quite a variety of goods.
The Defense member said that when the subject of what the Soviet Bloc. ;might
get from the U.S. was' discussed-.at the Summit,. conference most all of the items
were on .the strategic list and the State member referred again to the calcu-
lated risk and said that. he surely would be~ concerned if .the t"package"" of
goods desired by the Poles was, all strategic material.
In reply .to a 'question from MDAC, a State representative said a date for the
negotiations ; fiad not been set but they would.be held in Washington.
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The Defense member said he thought State should have some leeway beyond non-
-Positive List items but certainly no I/L I items. should be decontrolled
whether or not on an Ad Hoc basis. He agreed with relaxation Step No.. 3 with
the. exception of C-III items an the Positive List but would be willing.to give
further consideration to.the latter. He felt it most important that., the trans-
shipment problem be discussed during the negotiations,
The Agriculture member, in general, favored State's position and would like to
sell surplus agricultural commodities to other satellites but felt that eer-
..tain bulk items, such as,wheat, should continue to require individual licenses
in order to prevent the satellites from purchasing to such an extent of caus-
ing inflation..
The Commerce member said he saw no objection to retaining a few such items
under individual license applications even though there was .a presumption for
approval to Poland.
The Treasury member asked that paragraph 2 on page 3 of ACEP Document No. 128
'be revised by eliminating n( including. Communist China)tt and adding after USSR
and Communist Chinatt. He said that in view of the fact that NSC is currently
reviewing its document 152/3 with the objective of modifying, Treasury prefers
not to take a position with respect to the proposal at this time.
The State member said in view of the discussion, maybe it would be better if
State, merely cleared its position paper for the negotiations with ACED and the
Chairman commented that there,..seemed to be quite a divergence of views among
the members.
The CIA member said he had no intelligence information to contribute that viuld
prove helpful and took no position.
The ODM member said he had little to contribute but felt that without securing
assurances from Poland with respect to tranushipment, no strategic material
should be decontrolleda
The ICA member said he supported State to the extent of decontrolling C-III
items to Poland but agreed with Defense that no I/L I items should be decon-
trolled and that COCOM should be fully informed about any decontrol steps
that are to be taken.
The DAC member said he thought taking relaxation Step No. 2 should give State
sufficient leeway to negotiate with the Poles although he felt that there
might be scare non--Positive List items that should not be put under GRO and
mentioned bulk agricultural items and items requiring a long time to produce.
The Chairman suggested that a list of items to be placed under GL to Poland
might be prepared for State and some items retained for individual license but
with a presumption for approval in order that the volume might be constantly
under surveillance. He added that the"volume might very well be dependent
upon the amount of economic aid ICA gives to Poland.
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The.State member sad he must leave,but. didntt think we should get into making
up a list but rather State.should proceed with negotiations and . make. up a list
later and the, Chairman said.1 saw no.objeotion, The State-member pointed out
that the current licensing policy towards... the. satellites is.actually tighter
than the regulations and the Commerce member said that, with the exception of
.,agricultural items, denials of-applications to Poland'have been. very, small,
The State member (alternate). said that State would prepare a position paper
for use. at the negotiations and in reply to.' aquestion from the Ghairman, said
State would be willing to submit it to the ACEP. He pointed. out that the doe-
ument being discussed (ACED Document No. 128) had been prepared in Commerce,
:not.State,
The Chairman then referred to the chart which set up guidelines-(Attachment 3
to OC Document No. 1314) and asked for comments and if anyone saw a conflict
with NSC.directives.
The Agriculture member said Agriculture would like to sell all the surplus
agriculture commodities the.sate1]ites:couid consume.
The Defense member accepted the chart as a guide as did the State member who
emphasized the chart.was a guide. and not a fetter,
The MDAC member also accepted; the chart as a guide pointing out.-that it was
not an export policy that established U.S. foreign policy.
The CIA member suggested that it might be. helpful. if a document: were prepared
which would explain in further detail the conditions and alternate steps.
The. MDAC member said that no economic aid program had been set up for Poland
as. yet.
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