Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

ECA Telegram Files, Lot W–131, Paris Torep: Telegram

The Administrator of the Economic Cooperation Administration (Hoffman) to the Embassy in France

secret

Washington, June 13, 1949—3 p. m.

Torep 5807. Reference Repto 4369 May 25.¹

1. As indicated Torep 816² purpose I–B controls is not to require refusal of licenses for I–B items to Soviet Bloc but to restrict flow such commodities to reasonable level for current civilian use. US authorizes export I–B items East Europe in carefully restricted quantities. Therefore a I–B item would not necessarily, within meaning of Section 117(d),³ be a “commodity for delivery to any nonparticipating European country which commodity would be refused export licenses to those countries by the U.S. in the interest of national security”.

2. As a complement to the policy expressed in Section 117 (d), however, ECA should, pending institution by participating countries of I–B export controls substantially parallel to those of the U.S., take the following steps:

a. With respect to ECA-financed components requiring little or no fabrication, comprising a major portion of the value of the finished product, take all feasible steps to prevent their incorporation in I–B items intended for export to East Europe. In cases where denial of ECA materials might clearly have important adverse economic effects such as a reduction in important imports or a disruption of trade negotiations, application of this policy is subject your discretion but you may refer case here for review with full documentation if you feel guidance necessary; and

b. With respect to other ECA-financed materials, including industrial raw materials, which cannot be separated from non-ECA-financed commodities, discourage use of ECA-financed supplies in the manufacture of I–B items intended for export to Eastern Europe, recognizing that strict control is not feasible. All feasible steps should be taken, however, to ascertain if there is an excessive shipment of I–B items and where there is such evidence, as may perhaps be established in the case of ball bearings, close control over the flow of ECA-financed materials to the exporting industry should be established and the case referred here with lull documentation for action.

3. We recognize that best safeguard against excessive exports of I–B items would be adoption by participating countries of restrictions substantially parallel to U.S. export controls. When satisfactory controls are adopted with respect to specific items, either in the form of aggregate agreements among the major producing countries or in the form of controls paralleling those of the U.S., the restriction indicated in Para 2(a) need not apply.

4. Related subject. In the case of ECA-financed supplies entering manufacture of I–A items not controlled by participating country, Section 117(d) leaves no alternative but to take every practicable step to prevent inclusion ECA supplies in such items intended for export to non-participating European countries. In light of present disparity controls U.S. and participating countries, advise what steps you consider practicable effect such control.

Hoffman

1. Not printed.
2. See footnote 2 to telegram 496, February 5, from Paris, p. 78.
3. The reference here is to the Foreign Assistance Act of 1948.