. Sea ype sy “44,* +. TOP SECRET na. aa ret PE, 2. U. S. POLICY TOWARD SOUTH ASIA: CEYLON (NSC 5701; Progress Report, dated Jaly 24, 1957, by OCB on NSC 5701; Memo for NSC from Executive Secretary, same subject, dated July 31, 1957; Memo for NSC from Acting Executive Secre- tary, same subject, dated August 7, 1957) Mr. Cutler briefed the Council, and explained the reasons which had prompted the NSC Planning Board to propose a change in paragraph 80 of NSC 5701, as follows: "Continue to impress upon the Govermment of Ceylon that the provision of U. S. economic aid will be reconsidered should Ceylon expand its trade in rubber or strategic commodities with the Commmist bloc, and continue to urge that Ceylon d@iseontinue-ite-rubber-exports-+o-Comauniss Ghinae endeavorto minimize rubber exports to the Commnist bloc.” He pointed out that the Planning Board was unanimous in its support of this revision, but that the Joint Chiefs of Staff were opposed to the revision on the ground that no such change should be made until completion of the forthcoming review of U. 5. economic defense policy by the National Security Council. (A copy of Mr. Cutler's briefing note is filed in the minutes of the meeting.) He then asked Admiral Radford for further comments. Admiral Radford replied that it didn't seem to him to make very much difference whether paragraph 80 was revised or not. In point of fact, this Government was already following the course of action set forth in the proposed revision of paragraph 80 prepeared by the Planning Board. ‘The Joint Chiefs of Staff simply felt it desirable to point out the forthcoming review of U. S. economic defense policy and its bearing on the revision of paragraph 6&0. : The President inquired whether Ceylon was now finding it- self in greater need of rice than bad been the case when Ceylon made its first contract to exchange Ceylonese rubber for rice from Com- REPRODUCED AT THE DWIGHT, D. EISENBOWER LIBRARY munist China. Mr. Cutler replied that this was probably not the case, but that Ceylon must nevertheless find a market for its rubber. The President then stated that this seemed to be one more instance of the Coummnist practice of exporting food which was in short supply at home. Accordingly, it might be a positive advantage to the Free World to encourage Commmist China to sell rice, even though this vital commodity was in short supply. This would prove harmful to Chinese Communist government policy in China. Admiral Radford again repeated that he felt it was of no particular consequence whether paragraph 80 were revised or not. The President indicated that he believed the revision should be -2 TOP SECRET