Approved For Release "MIA-
1&
be to dezq to t b* b
vurU6 A rle
i a 1t ' . tm=work.
to the bloc
b) the
a.
of the b.
op~ of try vmL!d
nse V QPM#
of trade vith the
hed$'r feign
meal ex rsssioan by
ociatio"On permits
mss a policy of limited
bloc.
of eco c temse objectives
lit
a cite Qgp on
:ties relative to tho e
is
ea the newasitar of a limited control I rc
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i.e.,r the
3M200t/O'310
ece o
008-6
tae
bloc aUtary catisticc.
a else
one of the
e1
3 ,which cc
of the TE in the control
of caa .itiee and s 1,r
:ly to the war potential of the
economic pc t
costs mach such an attar would entail
record of official
,it asst ticu that the objectives
cessation of t
has been advocated not
t-1
are anaad.o s to
1
c
use ore
,~ ,.~.,p..~.. ,... ..... ..~.,__ ._
on Pore c Policy, , April 15. ,, 3955# p- 4, 6-
lum=
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3
you that the TSited States
ftad& Ciu
United states ae uiesce in
itym gm& 604 act, to tta
1,954 "that so for as it t be t
BwWe and the $OWI*t boc?"
or a Steed control
ties blase a.U1
at bloc s Sal to-be plane on4 e a clear &&nmtW
. 3).
t
Report stated. that the basic policy of the United States on East #eBt
reste& on four principles, of which xmber three read N"m free rid
ire a not sscv ty advantqp out of as Amt -West trade. n
on 39 of the
uqp car late o in the reaent situation
situation offers o rtunities to
trial. The
Etrategic" ,
ocoa c ablUtlma
3,d of the trade that ld. of
"the
tit* s;
who
b~aaaaacxe bane babied tbm
creating for the free
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. Criteria for Controls
Before the revision of the CoCom aid Battle Act Lists in the sucimer of 1954,
r o_ forma1 criteria had been established by CoCom countries for daterminging what
items should be controlled. The basis of the pre-1954 CoCom lists IL/I and II (embargo
and quantitative control) wv.s the product
of negotiations by the US, the UK and France;
this 'Tripartite Agreement originally was based on the criteria used for the US IA and IB
-It
tCn~om wee
t tr.
Tn r:.r~
1 CaC fn eU"
."roedtsts, tine fa1.o#r
i e as orl e IT- or_
the- cr terta_ earioyed
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trading p *iticn, the
of certain
at the seating of the
red alt r from viaw.
bloc sad by bard bs r ainiog SaIn
since the res loal in.
and our a ctic> s in
!alt t o balance of r b:f
0t 116t z
being a 3rig ritO& of tensions
se city controls STS trade with the
at be t& coned. and adopted to the s1tvatim,
wtcb acnfronts us. &
designed, with the 1w 1neut
VmWt of war to not that wbick we v=X have d wised.
we *ad* the assumption vhich now guess o' pollaigo in a L
related security t?14, orA bus : been generally confirmed
2. t ru f
no otti.ciee1 y
eantro A. fte O lists were
by
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5
are designed or
) ii
tri
mate a 3va ed tecbnoivgy or a3.g!
gplieas anly to goods Bufficierit3 ' Important
I of the Soviet bloc t t the absence of
an embargo WO WA permit a si is ut advance is Soviet bloc
contribute Bigsificantl r to the,
as, critical
potential of the giet bloc."
controls)
War potential of the $ovtet bloc
for List (t-be surveiflan
significance" but ` on which av le formations a
taablisb,the `ased for edmrgo or quantitative control.
ITi
meted as follows;
*ad tio IWg tam aspects. it iM,eas (a) it
on. It Nay a
s amongst otbore,
(b) sectors of i stry
isl interests a very closely
sr from peaeef ul uses to the manufacture of war
*WMASwent or of r direct military application and (c) other
h serve to svVport t basic
of e, co=try and which theref,
,rt either a peacetime
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6
try
al conventional concepts w
mt * A ,Avast
ion" and. ' seetora
rather than for
tot met. Intelligence
he degree of Soviet
95
or create a criti
evice that It
p1muiv
gro e , fee es rgo oar guatitativ
Ilea, arxt if there a
v'es Grooga as
not greatly
at,
of var and atomje energy mater,
a t w h i c h mgr r e a s o n a b l y be expected ,permit
Um-how incluting produc
incorporate advaaeced techno * or
enerr fr od tction over the level o
e?,ntlys. it
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or e. be achieved vtt n a e hwt pert,.
SLOW
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T
pant (by t
Soviet Bloc has a deficiency vhi is
to its military a pebilities and which it
within a short period."
T chief difference is the elisination of
port,entie3:' and in general the wad is mob sore
of the elts tion o the war potential target we
!cise. The connotatiofl
UK delegation to the CG comsenttng on the crop,
ed tion
the United. $; don view there was no doubt that a sub
ional Lists
es. For eerie, tbe7
derati+ a vich we" entirely consisten
rased in the United
t the Bloc va'a, or vas becoetng,
satisfy its militt
Level that
1563
eient, or
prodeced enough of a tier city to be able to
though an item made some contribution to military
its civilian uses.
potential it us of a ge al a obar'acter end was
for military purposes on a smaeEll scale in proportion to
item served the basic econmy of a
was not closely enough related to military
Justify ess urgo.0
effect of the 1954 List revision by Co
limit the co
Bose iteas (1) that m ke a direct and masurable c tributio.
to the pro 4uction Of military g'
technola , or (2) in v Lich
bloc bas a critical deficiency in relation
ince time British interpretation of (1) hoe been to exclude
e" ctmmod,iti r i.e., goods which are use
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as well as .11tary
advanced
isen have bad to do with
retained therefore rested Wader (c) critical deficiency in relation to
xtlitiem. Mat of
as.
vaa cited. burden of proof for =at of the commodities
ve3y r e f s i
M490;, did not = to reed eta ft
sting gam,, v eh wauId establish
critical in relation to its Soviet
mart ,ter of the fin
(a))- Lt, avue there were very few cases wtere (b)
3-00084A000100020008-6
,tion =do the fol. trg statement in
to the Bats in tam
and iteuaraa toad to meat
ego, axtjtative assn
e.a
ailf to capab lit
present wed nature, Was not written into the list
aD7 such.
eligible for.
ia with thetar is an war
JAM VOGJA have coa:de Into conflict with
the Wittsh inteoretation, given, above rich clear exclude3 citing
actrtbtettion to t "Inggic scontaaad-" as a attf :cation
shoaa4l be notidr, is the
of 1:46 1"g period of teaneion ? s
as the$ were lie and
a set of
t at the seeecu1ar
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9
at economic capabilities.
of dew of Mteria3s &a equivwnt
shitted to other sectors of the ec
a cwt on the bloc which in affect red= as the overall growth
braMU7 to l it military ca bilities as
the s Of the parts are liatit. t b
itissh interpretation of
ib
contributed
econamic capabilities. Since it vas not, the United states has attempted
embargo of scam commodities (e.g. rolling > fls and copper) under
raguirM=ts for tine a mmiodtty in time o;
relating to the future grovtJ2 of economic c b#litie s in general.
Sin" none of the pertinent elements of such a bgpothetical situwtica-4
te.g. vn=* waere, for how long,, Ir
the estimatjou of ai) tery regdreaente for a
41tVatiOn 1s extre*rtly difficult and uneertain this approach has not been
persuasive. In an r crane there is a flat coutra&tction between the
3. gttacts of Revision
8trict37 iUtMWeted
of tb* is
eta
iteria were bed to produce a
burden of proof now rested on the supporting
on not can4 eMlVded a tiple use iteu
for rete ntiOn. It vex a lnsvy b
from cou rot. but also precl d controls over basic ;ems, leavy iuvestaa ent
contribute to the doom of bloc Industry. Nut a great
3s left.
wwv ., ,. .,.,w 4au rv w Ba to the to effects on bloc capabilities
of the list r sou as a vole. The to effect of the list rarvUion
Sam=
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30
t Lsad.
et inate rely .p to t't,
lint review Was
recognized that
~r than the Unit
field of =cam tools and, mtel working
spareidite i item such as certain types of bores nills an lathe
se they criteria
able to agree that OUCU OT40MV
a deli te&,
ciency s cam. are
nee data 6j4 not
ra ve& frexm the list
on the
ing mills
of rot
ify u n d e r the criteria. Ieavy po
ladl.: flat
the mm is eampod in a
CqjVW maul Vas
Est
List 3
and aumniumi, were kept
rly has a deficiency in these metals
but it M04A be difficult to
relatio* to
Lou does zst :
arset ng the e
the criteria, now It
dispute. Rail trans-
only under strong
the a sio i of the Soviet bloc's inwstri.al war potent
op=tion to the quantities eb#:c a will in. the future be S Crtedd.
NOW
to question; in
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M
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11
ent controls
the 1019
controls though -rit1*u3ding a
ion to the overall Soviet b l=. econcy
ecot r. Over the short term and, in se.
retardation
tot certain that i,eil* existing controlS act=13-11 limit the
Of Soviet
ft
M
trade. otter factors may be equally or store li itiug,,
depend on outside sources of supply
av .lsble supplies of exportable commodities- Most Western
of the bloc have experier:eed ehr
certain I3-mi.ts or to ebsxge interest on wiounts in excess of
e in their clearing
he bloc and sc a bave had to restrict exports v1ie i their credit
the 34=4 s., The bloc bas occaaionallj kad to sell gold: U
stage of sterling. The evidence s geset that the a!t .
152/3 c cl es tz :t:
however,
or tbree years ba-we been all the bloc has been vtUti g or ab
gold. w A that they baTe not Vo teu to
s Urge scale. it is, of course, true that their 'stllingness to use go1.
Or other camw ities would have been :greater in the absence of controls. On
ice., ,, it seems Justified to any" that the controls have chard the
e i.ty patters of imports more than they lave li
trade. Whils Out coot krIL
t is interesting to note that
Mite ebe owes u VOIXM
trade would be in the absence
n asst-Vest trade (i.e.
betwe*u N=Opea,, Ctd couc trade tries arA the European $ vtet bloc)
MOW in 195+ than in azq previous postwar year.
Even if one its that the controls actually depress the vol of
eras? "he effect at the present ct .trots is pr bably slight. ' b]
econ'
and diversified
o its i r*ts by comparison is ver i 30813.
-59 eons .wed in April of 1953 that a casglate stoppage of trade fox t3een.
ve a sigaifict effect on the general level of
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now
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t MA that the
bound to came sc
It is robable that
.e.
eats to to cOfltro1a+ *Ad
o assess the ]gig-rmn
is cr
or as a general
the b] eseoaasW as a vbo]a tALMn
dasstte prod
the t of aet
tive1 controlUd be
b3 to WA ach
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SEMST
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ide the control ssacbivery. In a]se t erver,Y other case
bloc has
fey, if *ny, cases has intelligence been
of a InVort WOUX reduce the output of aZy
Icular aaiUtary item in the Soviet bloc. It b been somvbat easier to
the target my mve,
her than pro o-
controls have been scri as
06 7 lover
a n er Of gods remain 19
and vbich it vould probably have
of
'an here the ?, 'eemiption =at be tbat the teebnoloy in q ,
yes it =at
w U prothu e t
v
Production of the c ty (or an a4equate substitut
ertain aaOMOLIt eab 4 r a contribution of
mcobably at a
9-run altbovgh ins
ureraaU eco a ie c il.itjes b
Bf.71i1g
probat3y very
not affect t
10A Of the bloc
In the
t on relative economdo capabilities--though
vorable to the Soviet bloc.
2. eat ve Pz c tivi of Present Controls
of the lawt of can
question of
d Dot
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SZCM
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14
within the econcow -- of a gig set of controls.
e the cost is bor e, can we at least be mare that,
ilateeral. eontrerls p litica r
oat on the bloc? At present, of cow sea, we
c
this since the items selected for ttrol ve a not selected on this
present program inposes a cost on the bloc econoW follows
e proposition that the controls 11alt the total volume of
bloc Imports and alter their c ition. But we bane -- at present -- no
bi
ther way, we
e the denied goods
Leal measure of the economic gain to the bloc trca the obstruete d
?ea a2 ed to take place. tae cost to the bloc -- the impairment
of its overall economic capabilities -- the loss of thisaa" vantage vh1eh in
t is relate : to the cost of ring the Imports from, its ovn resources
the savings innv'olveil in not groth in the eaa its to
'a:eir unique c ; .buA
is 4aps1...?..1.esas
a .,rtt
oleol (or v caw-versa
a#a i as b o jus
part. c.,' a bundle sr ii t of a i. ties salea
+ us in
aaa v s ta e for i
Sco Eows G c$p* i li $,f 3. ;tae effect of ?:'a. e
004110 ri:. clt,pa i1t ties c
:Iyse , if *r' all, ?- .y
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Sit
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15
texts, the economic adv
probably greater for the Stet bloc t? n for the ices
the zcon .tel1igenee Committee is c nectio with
geed evidence that the cost to the b2. c of eliminating all Mast4kst trade
then (1M.51) being carried on would be considerably greater than the cost to
. X-oreover, considering the bloc's loser level of production and
the gain to Lbe bloc is relatively grew than the comparlson of absolute
Even more Important# because cony gtion is held to a
mint in the bloc in any case, the a
the cont of cessation of trade., was tb
of true to the bloc, or conversely
to be much are
d
to bloc production of both m1litary and invent ut
pabil.itiese could. not be said to depend
present
to believe that the d is not true with respect to the
of trade and within: fairly wide limits of allllti ns to or
decreases from that level.
lies Frith tale bloc.. In the absence of
t" contrery1 wing that increases trade between the bloc and the rest of the
wort increases the bloc's ecanomie capabilities relative to those of the West
and vice ve
the ecorxcrmic ana ,yis of East-West trade #we be
to involve a net advantage to the lest when political or other non- cone :e
factors are introduce. into the analysis si
se are ush non-quantifiable
it is only a figure of speech to say tyre a r advantage for the United
is merely that in a particular ease po].tica1 or other
security considerations are c ewridIng.
4. ; lications for Policy
The foregoing discussion my be summarised brief
1. Trade enntrole interfere with the composition
-59 Provided
to some extent with the volume of gast?eest trade.
Trade controls thus Sae se an economic cost to both the
Soviet bloc and the West.
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Mme
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16
Bost is reiativ e1 small on both: aid, but greater
1 bio both absolutely and relatively. In other
controls bart the bloc acre than they hurt
inset of trade controls within the
Lee for eeconceste defense policy is
po,Lie y old
sectors.
as we have seen
1* to other pess iei ting c a tries,
prewmd tb!%t the cost tam can both the
criteria
of a der of commodities would. preabab2,y not be feasible. Political and
practical considerations therefore dictate
blP control program
employed in selecting goods for denial viler t
,use on the one band t
terials and be .v7 'y capital
[atrial growth, but also tuny thin
.ta.'ry production but also have civilian uses.
than cur knowledge of the Soviet eeonorn' pe ,' ta;
ion {tree ently c lli l and too exclusively
of our kx lef ge of the Soviet bloc ecox , mores prdgmst
awe inl . ive,. and where necessary nore ,treary.
which does not argue that this item
is not. flnai3yg we should recognize that in practical .4
e there is diesgreement is the effect on the bloc one way or the
.et ea
ch is concerned with the overall impact and
SNCRBT
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17
on
.testa fors, a
tic VVWm"
in the dtrention t
control
this
rqp..t,/judgWut is po tb1e on3 can praaatic
an ob, ectiv'e distinction between *Str&te
of trade
.ted c
eptual
t
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!Drat
on
t, x is
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f tot&e ol
Swb a would ftwtew n o t e'er wxW form" t oo*U to
tj In the U d
dish ul to a trI re ti with the
firAnee "",
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SLE,"i
bloc tr*&-
appi, to ref in
of camoditiesy
der ise
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~aIlLT
,_
16
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SECRET
not surf i -en
mw MC4
memial 1
ei " t t
A SyStM At cti - - c
selective, not
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of SW siagle 1 to the :Lot
r
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A&i-.b the W.
bet
dom"tically
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y t
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V[ *Aditlonj.
paw4till is
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0084A000100020008-6
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In the light
able draw a
u=W.. Mw stru t : b list v UIA r*quir t f& r
6 , each -X mbie:h w to 4
SECRET
ble,, hom r
` (b) 4 (c). Liutlno~ n tde (a) .d mot
Pr--Au c I
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includom thew
Oder the t attriwtag
(c)
t a si t *Ae
` .tom Of reftreaft the l ftiloving two
-10.-
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for c-Art and ^4-,pmZatmd t13
At this srt4p it
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role-w-,
'may
std
s AF ., w'r
ter 4bick it w=14 be fewdble t-,
fttt
?12 -
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A
tr 1j t by tra& z-,w.tro1 is &U,*t1 Low it
by
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't * 't
rs. The
ju ..tied on If t,y
or loss impoal
various V i1t .+ for
reouluift from a LDta-~ aw.
lop
gal r f a.
;r xcti a rescurees it
? : 4 ; t ' . e f
t V6, experts
Jr egd.ir t*
-' from tx%d
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rom trade. Irre we a asY
cally o va .
he "ra q to
tr the
essent'lally e
61 (r -x"3? `a used U iz*UAon and *ion t_
na:i 1 division labor.
t
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pr y" In oru
oft'
;w altormt
p ri 3 J be aad attar
3 ET
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per tmit,
a ric
20
I:. I zimr,
vo,"d b*
these ox d.i t I s .it,
1 X for
It e d t
pro t
Oha" ratt e
W by the
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1de
tj C
controls lion
a frtm 3.o O. `
eamwdit"y w,
m"# a
0 ridq* ., no 131.04
ec
f *etl 1, acs
a
*0 the Boc wou.
w how twvi to
0" to tho gi
k,~ r7
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V .1.1
u1i
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9 the e o i "boa
".. c ri i t x oosts
N:)Yi iRL~.,
] q Lr;.s a
. ro uw1 WO a
tmft * t eve; taus,
il
Ow"
11 be - f v r, ''
by n
th --don.
0? 5 so, I h t: is
8 r4 , ,ju s
n too 14
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Approved For Release 2001/03/02: CIA RDPI -00084AO00100020008-6
Approved For Release 2001/03/02 : CIA-RDPO9 64A000100020008-6
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Approved For Release 2001/03/02 : CIA-RDP63-00084AO00100020008-6
Approved For Release 2001/03/02 : CIA- 0084A000100020008-6
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For Release 2001/03/02 : CIA:RDP;6'3-00084A000100020008-6
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Approved For Release 2001/03/02 : CIA-RDP63-00084AO001000200
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