Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

S/P–NSC Files, Lot 61 D 167, Public Law 45-NSC Determinations

Memorandum by the Deputy Assistant Secretary of State for Economic Affairs (Linder) to the Counselor of the Department of State (Bohlen)¹

secret

[Washington,] October 26, 1951.

Subject: Proposed Dissolution of the Special Committee on East-West Trade

Problem

At the NSC Senior Staff meeting on Tuesday, October 30 a draft memorandum will be considered which recommends the dissolution of the Special Committee on East-West Trade and the transfer of its incomplete projects to the Director for Mutual Security. This memorandum was prepared by the Office of the Executive Secretary of the NSC and has been transmitted to the Senior Staff at the request of the Special Committee, but without recommendation by that Committee.

Recommendation

1. The Department should take the position that the dissolution of the Special Committee is premature at the present time and should express opposition to such a move.

2. The Special Committee’s uncompleted projects should be completed under present arrangements for eventual submission to the Senior Staff.

Discussion

The memorandum bases its first recommendation on the ground that with the passage of the Battle Bill and termination of the NSC’s responsibility for determinations under the Kem Amendment the Special Committee has completed its assignment and should, therefore, be dissolved.

It is the Department’s view that the implementation of the Battle Act may result in continuing a considerable amount of work for the NSC in the East-West trade field. To begin with, the President has a substantial range of responsibilities under the Battle Act which he cannot delegate to the Administrator and on which he must consult with various agencies; for example, it rests with the President to determine when aid should be withdrawn or resumed. In practice, he may wish to continue to get advice on such matters through the Security Council in view of the security implications of terminating assistance.

The other principal reason for maintaining the East-West Trade Committee in existence is the fact that the problems of East-West trade policy extend far beyond the subject matter of the Battle Act and cover a range of issues with which it is anticipated the National Security Council will frequently have to be concerned. Problems involving shipping and bunkering policy, finding alternative markets for free world goods, developing alternative sources of supply, and many other issues will frequently require interagency consultation and eventual consideration by the National Security Council. In total the economic defense work of interest to the National Security Council may be so great that the National Security Council would find it useful in the future, as in the past, to have the Special Committee give the work first attention for the Council. In any event, the matter could be decided on a more reasonable basis at a later date when there has been a chance to evaluate the continued workload on the Council in the economic defense field and examine possible alternatives for dealing with it.

The Department, in a letter of October 16 to the Bureau of the Budget, recommended that in the administration of the Battle Act there be the fullest possible reliance on the facilities of existing agencies and existing interagency organizational arrangements. In particular, the Department urged that the NSC Special Committee on East-West Trade continue as the mechanism for interagency consultation in implementing the Act.

The second recommendation of the memorandum, to refer uncompleted projects to the Director of Mutual Security, is based on the statement that such action seems appropriate in view of the statutory responsibilities of the Director of Mutual Security and the fact that he is now a member of the National Security Council.

The projects in question are—

1. A Report on Japanese Trade with the Soviet Bloc particularly Communist China and Manchuria.

This report is being coordinated by State and done largely by State and Commerce. It is to recommend the trade control policy we wish to urge on Japan.

2. Analysis of the Soviet Bloc’s Trade with the Free World.

This study, coordinated by Commerce and done largely by Commerce, will require interdepartmental consideration.

3. Decreasing Reliance on the Soviet Bloc.

State is coordinating this study on which the work is being done principally by ECA, and secondarily by State.

Except as the latter problem may involve the question of additional and/or alternate uses of aid, the Mutual Security Director’s interest in these subjects is not indicated by statute. In dealing with the problem of finding alternative markets for free world products—an integral part of the larger problem of decreasing reliance on the Bloc—the Administrator would be operating far outside the range of his statutory responsibilities. There is actually a legal basis for arguing that he cannot undertake responsibilities such as those involved in the projects mentioned.

The Mutual Security Act prohibits the Director from assuming functions other than those assigned to him by law, and only a very broad interpretation of the Battle Act could give the Director responsibility for the whole economic defense effort as an adjunct of his East-West trade responsibilities.

In regard to the second recommendation, it, likewise, seems unwise to make hasty decisions which it may be necessary to reverse in the near future. Since the present mechanism is a satisfactory one, it seems better to continue it in existence, allowing its work to proceed as presently assigned and reserving for the future the decision whether or not to make other arrangements.²

1. Drafted by Moline.
2. According to a memorandum by Walmsley of November 5, the NSC Senior Staff at their meeting of October 30 decided to postpone action on the dissolution of the Special Committee on East-West Trade pending a report by Harriman’s office concerning organizational changes to be instituted under the Mutual Security Program. The Special Committee was instructed to continue work on the three projects outlined in the source text (S/S–NSC Files, Lot 63 D 351, NSC Determinations No. 18–21)