This attitude was stimulated by the Korean truce of July 27, 1953. It was also stimulated by the gestures that the Soviet Union began making in the direction of livelier East-West trade.

Governments in the free world tended increasingly to the view that some revisions in Western controls might be made without sacrifice of security interests.

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.