HMIY ASeITRE SECRET As for NATO, the pressure to trade with the Soviet bloc would become irresistible if there is any considerable recession in the. United States. If we take an isolated position on this is- sue, our cordial relations with our NATO allies and other allies will be seriously endangered. For all these reasons, Secretary Dulles said he would personally go further than the positions outlined in the CFEP paper which was now before the Council. He would favor more liberal trade policies than this paper envisaged. He did not think that the negotiating position in COCOM proposed for the United States in this paper was sound--a negotiating position which amounted to prolonged wrangling over each item, with appeal to the three Cabinet Members (the Secretaries of State, Defense and Commerce). in support of this latter view, Secretary Dulles reminded the Council of the bitterness which had been occasioned in COCOM by the battle over the elimination of the China differential, particularly on the part of the British. Before the China differential had been eliminated, the British had been in the habit of blaming us for the fact that trade between the United Kingdom and Communist China was of negligible size. Now that the differential has been removed and the trade is still not very notable in volume, the British must blame the Chinese Communists rather than ourselves. ; the the the the When Secretary Dulles had concluded his observations, President spoke up to state that in five long years this was first time that a voice had been raised in‘support of his, President's, position on the issue of controls on trade with Soviet bloc, which for the most part he had considered dammed silly practices (laughter). General Cutler addressed himself to Secretary Dulles and said that he understood that in favoring liberalizing the controls on trade with the Soviet bloc, the Secretary would still maintain the controls on war-making items. Secretary Dulles replied in the affirmative, whereupon General Cutler-summed up the Secretary's position as in general following closely the British position. Both the President and Secretary Dulles said that this was correct, generally speaking; the President adding that of course we would continue to control shipment of scarce items, of which we were the sole producers, to the Soviet bloc. Secretary Dulles agreed with this proposal, and added that we would also negotiate the controls on an item-by-item basis rather than on a category basis, as the British desired. General Cutler then called on Mr. Walter Williams, the Acting Secretary of Commerce. Secretary Williams indicated that while he was somewhat intimidated by the force of the views of the President and the Secretary of State, he still felt that he must oF . “ i i ee, Ten i > wv s a fe Dd... . Tae me bree ee oe make his differing position clear. He believed that the issue was 4 PARE ACQIE[fadhzcner