The Press TUESDAY, APRIL 23, 1957. Western Trade With China

Press, Volume XCV, Issue 28259, 23 April 1957, Page 10

The Press TUESDAY, APRIL 23, 1957. Western Trade With China

It is not surprising that the United States has agreed to an easing of Allied restrictions on trade with China, for differences of opinion on this subject have sharpened recently—so much so that the subject has become a major irritant in relations between the United States and several of its allies. Fifteen nations imposed an embargo on trade with Communist China when China was actively at war with the Western Powers in Korea. The 15 nations include all the North Atlantic Treaty Powers except Iceland; Japan is the fifteenth nation. Several of the 15 nations have been restless about the embargo, and during the last year, in particular, have shown their desire to relax it. Through its compelling interest in world trade, Britain has assumed the leadership of the nations favouring relaxation. Sir Anthony Eden raised the question in the United States in January last year, and at the recent Bermuda conference Britarn again urged relaxation on the American Government. France, Western Germany, Belgium, and Italy are other Western trading nations which think as Britain does. Japan, of course, is deeply interested in restoring twoway trade with China. But, though it has reluctantly agreed to some minor relaxations, the United States has, in general, opposed raising the embargo. The principle on which the United States justifies the embargo is that it promotes the security of the free world. So comprehensive a definition obviously invites argument. There is wide agreement that an embargo on the export of strategic materials to China is e protective measure the Western nations are entitled to maintain—though some in the West find good reasons for doubting its effectiveness. But nations which agree with the ban ■on trade in strategic materials do not necessarily agree that the present tight embargo on trade serves Western security. In this context, the strongest argument for maintaining the embargo is that Russia is weakened by having to export capital goods to China; China’s demands, it is held, put a brake on Russian economic expansion and tie Russia’s hands at a time when it would dearly like to offer economic largesse to Asia at large. On the other hand, Russia’s hand in China must be strengthened by the controls. As Western trade with China is more closely restricted than Western trade with the European Communist States, Russia is able to act as a purchasing agent for China in the West. Because there has been such wide agreement that this anomaly, at least, should be rectified, to single out China for different treatment from the rest of the Communist block could not be presented as agreed Western policy.

The United States has now agreed to differ from its friends on this point. It will make no change whatever in American policy of embargoing all trade with Communist China, but is agreeable to revisions which would reduce the control list of embargoed goods to China to the same level as that applied to the European Communist States. At the same time, the United States proposes that the common control lists for the whole Communist world be adhered to strictly, and that less use be made of the “exceptions pro- “ cedure ” (of which Britain has increasingly availed itself in the last year). The position is by no means clear yet. The whole matter is subject to negotiation among the 15 nations participating in the control system, and among them there are certain to be doubts whether the concessions the United States is prepared to make go far enough. However, the indication that the United States is prepared to give way a little to its allies on a matter on which it feels strongly will be welcomed. Indeed, it will be received with relief, for a position had been reached which led “The Times” to observe that “if the embargo cannot be “ changed by agreement, it may “soon be changed by disagree- “ ment between America and “ her allies ”, With so much still so uncertain, changes in the trading pattern cannot be foreseen. For instance, the volume of new trade will obviously depend upon the amount of relaxation that is eventually agreed to. Some observers believe that a huge market will open up to Western trade when trading channels with China are cleared. China certainly needs a wide variety of capital goods which Britain and other Western nations can supply. But whether China can pay for them, and, if so, in what currencies, are matters yet to be explored. . China’s trading system has been totally changed by the Communists. There is .no possibility of a return to the old system where Western trading concerns handled both exports and imports as middlemen; and equally there is no certainty that a new system will work as well. In common with other Western trading nations, Britain is entitled to believe that its trade with China will expand, but by how much no-one can toll The “ Financial Times ” said recently that it was as well for Britain to be warned in advance against “ another East- “ West trade fantasy, which “ would suggest that China might offer an important “ measure of relief to the strain “on the British balance of pay“ments”. The one thing that does seem certain is that the common belief that Western trading interests would benefit substantially from relaxation of the embargo will be put to the test.