Basic Policy Reaffirmed

The new administration in Washington, taking account of such considerations as those, and wishing to be sure that United States policy was the most effective that could be devised, began a thorough review of the economic defense policy of the United States in the spring of 1953.

This policy review was completed around the beginning of August. The third semiannual Battle Act report, which was published last September 28 and which covered the first half of 1953, stated that the conclusions of the review “will be reflected in the economic defense actions of this Government during the months to come.” In the present report, which covers the second half of 1953, it is possible to give more information about those conclusions.

As a result of the policy review the basic economic defense policy of the United States was reaffirmed. There were, however, some shifts of emphasis—with respect to trade with the Soviet bloc in Europe—designed to make the basic policy more effective. We shall discuss those shifts presently, but first let’s summarize the basic policy as it has existed throughout the 6 months covered by this report.

This basic policy of the United States on East-West trade rested on the following principles:

  1. Mutual security can best be advanced by continued increase in the political, economic and military strength and cohesion of the free nations relative to that of the Soviet bloc.
  2. The free nations should not furnish a potential aggressor with goods which directly and materially aid its war industry and military buildup.
  3. The free world may derive a net security advantage out of some East-West trade.
  4. Security export controls should be applied on a selective basis, except in the case of military aggression, when a policy of complete embargo may be in order.

In accordance with those principles the United States has long been exercising certain controls over its own trade. Here is a short description of those controls:

United States exports to Soviet bloc in Europe: Not prohibited entirely, but limited to clearly nonstrategic goods.

United States imports from Soviet bloc in Europe: Not prohibited, except for certain types of furs.

United States shipping to Soviet bloc in Europe: Not prohibited, if carrying properly licensed goods.

United States exports to Communist China and North Korea: Prohibited.

United States imports from Communist China and North Korea: Prohibited. (Some licenses were issued, though not recently, for goods needed in United States military stockpiles and in special hardship cases.)

United States shipping to Communist China and North Korea: Prohibited.

As for the trade of the rest of the free world with the Soviet bloc, the policy of the United States was set forth in the Battle Act (the text of which is at the end of this report) and in certain executive directives. The policy was not to prevent all East-West trade but to cooperate with other free-world countries in a system of selective and flexible controls. The aim was to prevent Soviet-bloc countries from obtaining items that would contribute significantly to their warmaking power, and to insure that the trade which did go on served the real economic and security interests of the West.

Ever since the Communist aggression in Korea in 1950, the Far East has presented a policy problem different from the problem of controlling shipments to the bloc in Europe. The official position of the United States Government—both before and after the 1953 policy review—was that the current levels of controls by the United States and free world over shipments to Communist China and North Korea should be maintained. Later on in this chapter we shall report on what happened in the China trade during the last half of 1953.