Memorandum from Joseph McDaniel to Paul G. Hoffman, Report on the Treatment of East-West Trade Question in Congressional Presentation, with Attached Draft Report
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OCR Page 1 of 18mm. Harriman
Mr. Paul G. Hoffnan- room 516
February 1958
Mr. Joseph McDanicl, Jr. - room 508
Treatment of East-Wost Trade Question
in Congressional Brosentation
It is the opinion of lir. Golding, lr. Cox and mygelf and concurred in
by representatives of the State Department that it sould be in the best in-
terests of ECA if you stated to the committee that you would like to dia-
cusa in Executive Session all questions ting to East-Mest Trade.
We recomacnd this for the following reasons: pertaining
1. The most important devolopment in this area has been tho estab-
lishment of the Concultative Group. Several participating countries have
stated that if the existence of this group becane a natter of public know-
ledge they would be compelled to withdraw. This vould jeopardise the succeas
of the program which we are now folloing.
this discussion
2. Sweden which doca not participato in the group déscussions hab stated
a number of times that if it becomo knomn that it had even gone so far as to
carry on bilateral discussions with the United States gencerning the control
of its exports, it would be forced to broak off negotiations immedistely.
3. Members of Congress are probably more interested in the security ase
pects of East-West trade than they are in the trade statistics and economic
theories, end it is the security aspect which cannot be discussed at all with-
out provoking questions which cannot be answered publicly. Any statement rew
atricted to the economic aspect would be too to pasa without provoking
inocuous
such quostions.
If, hower, you feel it mandatory to moke some statement in open sea-
sion se recommend that it be as follows:
East-Mest trade is a necessary ingrediont of economic redovory in Europe.
The figures for 1949 are not yet final, but a very close estimate of the in-
porta of the particip ting nations from Eastern Europe is $1.4 billion and the
exports of Sestern Europe to Eastorn Burope was about $1.2 billion. This, how
over, is ohly about a third by volune of the pro- r exporta and imports. It
seems obvious that if all of this trade were oliminated the United States would
have east upon it the additional burden of aupplying to Bestern Harope the com-
modities which it noz obtains without dollars from Eastern Europe. A rough em-
timate of the total additional coat of euch an event might well run to
around a billion and a holf dollars per annum. Necossarily ECA has been inter-
eated in increasing East-West trade as that builds up the economy of Western
Burope without additional cost the Anerican tax payer. Ofecurse such trade
alao builda up the econoay of Eustern Burope but we mast resember that the satel-
lite countries are in reality conquered nations. admini tered by officials ant
from Moacon, and they contain a great many people who Ard not adherents, of con-
munim.
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