‘Rival Desirabilities’: Britain, East–West Trade and the

‘Rival Desirabilities’: Britain, East–West Tradeand the Cold War, 1948–51

In 1945 Britain emerged from the Second World War in a stateof economic turmoil. It had spent one-quarter of its wealth infinancing the war effort, accumulated approximately 14 billiondollars worth of sterling debts, and suffered a sharp decline in thevalue of exports to one-third the 1939 figure.1 Despite receivinga low-interest loan of 3.75 billion dollars from the USA in 1946to replenish ever-decreasing dollar supplies, the recently electedLabour government led by Prime Minister Clement Attlee, heavily in debt and close to bankruptcy in its external accounts,struggled to cope with the new economic order under the BrettonWoods Agreement of freer trade and payments. Although theTreasury attempted to re-establish sterling as a major inter-national currency through convertibility in July 1947, the world-wide dollar drain only plunged the British economy into furthercrisis. In order to stabilize Britain’s international economic position as banker to the sterling area, the Attlee governmentbegan to look towards non-dollar sources in an effort to stimulatetrade and reduce dependency on the dollar.2

Before the war Eastern Europe had proved to be a highly profitable non-dollar source for British trade. While the Attleegovernment was anxious to resume normal trade contact withthese countries in the late 1940s, diplomatic relations with theSoviet Union began to deteriorate with the onset of the ColdWar. The failure of the London conference on the future ofGermany culminated in the division of Europe into two opposingblocs in December 1947. Even though Britain had signed a seriesof trade agreements with several Eastern European governmentsin 1946–7, policy makers in the Foreign Office and the Ministryof Defence began to call for a firm stance against Soviet

Ian Jackson

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expansionism. In the meantime, the Truman administration hadbegun to impose domestic strategic export controls on East–Westtrade with a view to establishing an international embargo againstthe Soviet Union and its Eastern European satellites. Britain’srole in the negotiations leading to the establishment of thisembargo is the subject of this article.

From Trade to Embargo: Britain and East–West Trade

In early September 1948 the United States contacted Britain witha view to establishing an international strategic export-controlprogramme on trade with the Soviet Union and its EasternEuropean satellite states. After much internal debate the Trumanadministration had concluded that American national securitywould be better served if an embargo were instituted on militaryand strategic exports to Eastern Europe. In March 1947 policymakers responded swiftly to the threat posed by Soviet expan-sionism in the Near East by appropriating economic and militaryassistance to Greece and Turkey under the auspices of theTruman Doctrine. Concerned, moreover, by the economic, military and political vulnerability of Western Europe, Secretaryof State George C. Marshall launched the European RecoveryProgramme (ERP) in June.3 In December a strategic embargowas added to the Truman administration’s evolving strategy ofcontainment against Moscow. The embargo was to be executedthrough two lists of restricted items in East–West trade: the 1-AList was composed of military commodities and the 1-B List con-tained semi-strategic or ‘dual purpose’ exports. By the summer of1948 the State Department and the Economic Co-operationAdministration (ECA) had begun to initiate negotiations withERP nations in Western Europe in an effort to obtain support fora multilateral export-control programme in East–West trade onthe basis of the 1-A and 1-B Lists.4

As the largest power in Western Europe, Britain was the firstERP nation to be approached by the ECA with respect to theAmerican embargo initiative. Given the Attlee government’senthusiastic response to the Marshall Plan and willingness toconfront Soviet expansionism, the State Department believedthat the United Kingdom would not only actively endorse a multilateral embargo but would also take the lead in negotiations

266 European History Quarterly Vol. 31 No. 2


with other Western European countries. The two nations hadformed a close partnership during the implementation of the ERPwith Britain organizing the European response to the MarshallPlan. Further still, Washington and London had been engaged in a massive airlift of supplies to Berlin in response to Stalin’sdecision to blockade the city in April 1948. In light of Anglo–American co-operation during the early years of the Cold War,Britain was the only ERP nation to receive the full contents of the1-A and 1-B Lists. By contrast, France, Italy, the Netherlands,Belgium, Luxembourg, Norway and Denmark, while alsobriefed on American policy, would only receive copies of the 1-A List. It was clearly the intention of the Truman administra-tion that collaboration with Whitehall, in the words of VibekeSørensen, would ‘pave the way for a general acceptance of exportcontrols in Western Europe’.5

The Attlee government’s reaction to the American embargoinitiative was mixed. On the one hand, the economic ministries inWhitehall viewed the imposition of a multilateral export-controlprogramme in East–West trade with trepidation.6 On the otherhand, the deterioration in relations between the West and theSoviet Union over the failure to resolve the German question inlate 1947 pushed the Foreign Office and the Ministry of Defencetowards the acceptance of some restriction on strategic exports tothe Soviet bloc.7 To understand British policy fully it is necessaryto examine these two contrasting positions in detail.

From the perspective of the Treasury and the Board of Tradecommercial contact with Eastern Europe was desirable givenBritain’s chronic dollar shortage and balance of payments problems. Any severe curtailment of trade in the non-dollar markets of Eastern Europe, they feared, would be detrimental tothe rapid recovery of the British economy after the devastatingeffects of the Second World War. To illustrate the importancethey attached to East–West trade in the mid-1940s, it is necessaryto examine the United Kingdom’s trade figures with EasternEurope before and after the war. Traditionally, Britain derivedvaluable imports in raw materials such as coarse grains, timberand coal from the Soviet Union, Poland and Czechoslovakia. TheUnited Kingdom, moreover, was to become a key market forimports in capital equipment and consumer goods during Stalin’sdrive to industrialize the Soviet Union in the 1930s. As such thefigures for this period bore out the importance of Eastern Europe

Jackson, Britain and East–West Trade, 1948–51 267


to the British economy. In fact, trade with these three countriesin 1936–8 had yielded some 6 per cent of total British exports and imports. After the war the Board of Trade once again lookedto Eastern Europe to provide markets for capital goods andmachine tools and sought to import timber and grains for thehousing industry and agriculture respectively. In 1946–7 importsfrom Eastern European countries grew three-fold from 5.8 to17.8 million pounds (annual figures) with a large portion of thistrade originating in the Soviet Union.8

The Attlee government’s commitment to East–West trade wasembodied in a series of trade agreements with Eastern Europeangovernments in the late 1940s. The most significant of theseagreements was the Anglo–Soviet Trade and Financial Agree-ment of December 1947, which guaranteed the shipment of overthree-quarters of a million tons of coarse grain from Russia to theUnited Kingdom.9 It was with some anxiety, then, that theForeign Office reacted to the Mundt Amendment to the Econo-mic Co-operation Act of April 1948. Under the Mundt Amend-ment, nations receiving ERP assistance could not re-export commodities of strategic or ‘dual purpose’ value obtained fromthe United States through the Marshall Plan to Eastern Europe.The measure, which sought to prevent Moscow from acquiringmaterials for the purposes of military production, was the subjectof considerable concern in British government circles. Despiteseveral attempts to impress upon officials at the US Embassy in London the significance of East–West trade to the UnitedKingdom’s economic recovery, Washington insisted that ERPassistance should not be subject to third-party trade with theSoviet Union or its satellites. During one Foreign Office meetingsenior policy makers became so exasperated with the MundtAmendment that they considered accepting a much lower allot-ment of Marshall aid in order to preserve trade levels with theSoviet bloc.10

While the Foreign Office and the Ministry of Defence sharedthe conviction of the economic departments in Whitehall that themaintenance of adequate East–West trade levels was an essentialcomponent of Britain’s economic-recovery programme, the onsetof the Cold War forced them to evaluate the issue from the viewpoint of national security. Following the breakdown of theLondon talks on the future of Germany in December 1947, the foreign secretary, Ernest Bevin, had become convinced that



the United Kingdom and its Western allies should take a resolutestand against Soviet expansionism in Europe. The communistcoup in Czechoslovakia in February 1948 provided the impetusnecessary for Bevin’s plan for a continental defence pact to berealized with the formation of the Western European Union inMarch. As the Cold War entered its darkest days the foreign secretary was anxious to secure a military commitment from theUnited States to defend Western Europe from a potential Sovietinvasion. The Berlin blockade, which began in the summer, notonly demonstrated the potency of the Anglo–American alliance,but also underscored the invaluable contribution of the Attleegovernment in waging the Cold War against Moscow.11 Thus, theForeign Office and the Ministry of Defence saw the merits ofimposing an embargo on strategic exports to the Soviet bloc.Both ministries were convinced that a limited export-control pro-gramme could prevent the transfer of technology and militaryknow-how from the West to Moscow: if effective, the policy, theybelieved, might help to slowdown Soviet nuclear and con-ventional military production. It is important to note, however,that the strategic embargo envisaged by the British defence estab-lishment was considerably narrower than the one proposed by theTruman government.12

Despite the contrasting views of the ministries involved intrade policy towards Eastern Europe, the British cabinet agreedin principle with the objectives and rationale behind the Ameri-can embargo initiative. As the 1-B List could only be discussedwhen a general agreement on a suitable export-control pro-gramme had been secured amongst the Western European governments, ministers focused their attention on the 163 itemscontained on the 1-A List. Prime Minister Attlee instructed theBoard of Trade and Ministry of Defence to construct a new listof items that reflected British security and trade interests on the basis of the American list.13 Upon receiving the report of the Economic Policy Committee (EPC) in late November, the cabinet approved the Board of Trade/Ministry of Defence list.The new list, which contained a number of items not included onthe 1-A List, was approximately two-thirds the length of itsAmerican counterpart.14 Significantly, the cabinet endorsed therecommendation of the EPC that the new list rather than the 1-AList should be presented in negotiations with other WesternEuropean governments.15 In this way, diplomats would be able to



modify Washington’s demands for a wide-ranging embargo thatmight disrupt British trade contacts with Eastern European governments, if adequate support could be garnered from mem-bers of the Organization for European Economic Co-operation(OEEC). In short, by proposing an alternative export-control listthe Attlee government hoped to mould international embargopolicy in the shape of British trade and security interests.

Assuming Command: Britain, France and the OEEC Negotiations on East–West Trade

While the ECA had approached other ERP nations in WesternEurope with regard to a possible multilateral export-control programme in the autumn of 1948, only Britain and Italy had re-acted favourably to the American embargo proposal. In general,the other OEEC governments were worried that the applicationof formal restrictions on trade with Eastern Europe would havedevastating domestic political and economic repercussions. Anunpopular measure such as an embargo on East–West trade during a period of economic readjustment would, they thought,be very costly in political terms. They argued, moreover, thatexport restrictions on commerce with the Soviet bloc countrieswould deprive manufacturers of valuable non-dollar markets inwhich to trade.16 Consequently, British diplomats were faced withthe arduous task of obtaining support for a policy initiative thathad largely been decried in a majority of capitals throughoutWestern Europe.

The Attlee government’s task of persuading its continentalpartners to adopt a common embargo in East–West trade wasmade more difficult still by Britain’s ambivalent attitude toWestern Europe. Although Bevin had paved the way for aWestern Union with the signing of the Brussels Pact, by mid-1948 London was clearly losing its grasp of the leadership ofWestern Europe. It had become apparent that Britain’s per-ception of Western European co-operation diverged sharply fromthose of its continental neighbours. In particular, France underthe guidance of Robert Schuman was determined to press for-ward with the political and economic integration of Europe in theform of a supranational community and customs union. Bevin,by contrast, wanted to maintain an intergovernmental approach



to Western European collaboration. From the summer of 1948onwards his main objective was to secure an American militarycommitment to the continent through the framework of theBrussels Treaty. Any designs Bevin had for a potential customsunion in the early months of 1948 were superseded by his resolution to build a strong bulwark against the ubiquitous threatof Soviet aggression. In fact, by January 1949 the EPC, com-posed of senior ministers in Attlee’s cabinet, had concluded thatBritain’s global obligations and commitment to the sterling areaprecluded any involvement by the United Kingdom in a supra-national European community.17

Negotiations between British diplomats and the OEEC inJanuary failed to achieve the cabinet’s objective of securing anagreement to implement a common embargo in East–West trade.Despite the exacerbation of Cold War tensions, the majority ofthe OEEC governments were not prepared to sacrifice valuabletrade with Eastern Europe in the interest of mutual security.Nevertheless, the French delegation was willing to explore theBritish proposal in a series of bilateral talks. Although motivatedby economic interest like many of the other members, the Frenchgovernment shared British concerns about the security ofWestern Europe. On signing the Dunkirk Treaty in March 1947,the two powers, despite different perspectives on European integration, began to work closely on security and economic matters: organizing the European response to the Marshall Planand creating the Brussels Pact.18

In late January 1949 London and Paris were also able to reacha consensus on East–West trade. Most significantly, the Frenchgovernment was prepared to accept the British export control listas a basis for the negotiation of a common Western Europeanembargo, with minor modifications. A newly agreed Anglo–French (A–F) list evolved from the bilateral discussions betweenthe two governments, and this list was duly circulated to the otherOEEC members and the ECA in early February.19 In assumingcommand of the Western European embargo initiative Britainand France sought to realize three interrelated objectives. First,they believed that an agreement in principle on the A–F Listcould be achieved through multilateral negations with the OEECmembership. As the A–F List only contained items of direct military value to the Soviet Union, the two governments wereadamant that vital trade links between the OEEC members and



Eastern Europe would not be hindered by a limited strategicembargo. Second, if London and Paris could successfully con-vince other Western European nations of the merits of the A–FList, the Truman administration might be forced to modify thecontents of the 1-A List. To this end, the Western Europeanswould gain an important bargaining advantage over Washingtonin future negotiations on East–West trade. Finally, before insti-tuting domestic export restrictions Britain and France wanted toensure that other nations imposed similar controls on trade withthe Soviet bloc. Neither the British nor the French governmentwished to lose valuable markets in Eastern Europe to WesternEuropean competitors unencumbered by trade controls.

The A–F List, which contained only ninety-five items on theAmerican 1-A List, was received favourably by the OEEC membership. Yet only the British, French and Italian delegationsexpressed the commitment of their governments to an embargoon the basis of the A–F List. Both the Swiss and Swedish delega-tions refused in principle to the imposition of controls on East–West trade. While the Benelux nations were receptive to therationale behind a strategic embargo from the standpoint ofWestern security, they were wary of the potential economic coststhat the venture would entail. Meanwhile, the Anglo–French initiative was severely criticized by the ECA and the AmericanEmbassy in Paris. Ambassador Jefferson Caffery complained tothe State Department that the Western European governments increating a new list were not adhering strictly to the guidelines ofthe 1-A List. Caffery argued, moreover, that the existence of twolists could only delay progress towards an agreement to establisha multilateral export control programme. Worse still, the con-tinuing dispute between the ECA and the Foreign Office oversome thirty-four items on the 1-A List led the Truman adminis-tration to conclude that Britain had acted ‘prematurely’ in creat-ing a joint list with France.20 Negotiations on a multilateralstrategic embargo during the early months of 1949 were fraughtwith uncertainty. Failure to achieve meaningful progress with the OEEC and an inability to find a common ground withWashington on the 1-A List placed the Attlee government in aninvidious position. A senior Foreign Office official succinctlyarticulated the dilemma facing London:



. . . altogether we are acutely aware of what might be called the rival desir-abilities in this matter — the desirability of going as far as we can with theEuropeans without committing ourselves to the Americans and the desirabilityof giving the Americans as much help as possible with Congress.21

By March it had become apparent to British policy makers thatthe intricate task of reconciling the strategic objectives ofWashington with the economic considerations of the OEECnations rested squarely on the shoulders of the United Kingdom.

Undeterred by the reticence of the OEEC governments, theEPC recommended, in a paper presented to the cabinet on 10March, that export controls on trade with the Soviet bloc be insti-tuted ‘without delay’. In order to minimize the effect of the newrestrictions on Britain’s balance of payments position, exports tothe USA, the Commonwealth and Western Europe would con-tinue to flow freely.22 By approving the EPC paper the cabinetsignalled its intention to press forward with the implementationof a strategic embargo even though the majority of the OEECgovernments had not given assurances to participate in a multi-lateral export-control programme. From the available evidence,it appears that the Attlee government took the decision to pro-ceed with the application of domestic restrictions on East–Westtrade for a number of reasons. First, Whitehall perceived that theSoviet military threat, manifested in the actions of Moscow inEastern Europe and Berlin, warranted a firm response fromLondon. British ministers hoped that an embargo on strategicgoods would send a resounding message to the Kremlin that theUnited Kingdom was prepared to take all necessary steps to prevent a Soviet invasion of Western Europe. Second, havingagreed to lead the embargo negotiations in Western Europe,London was obliged to follow the example of the Truman admin-istration in prohibiting strategic exports to Eastern Europe. Inparticular, the Foreign Office was keenly aware that friction overEast–West trade might strain Anglo–American relations. GivenBritain’s economic and military dependence on the UnitedStates, officials were anxious to avoid conflict on an issue of secondary importance such as export control policy. Finally, bytaking the decision to implement domestic trade controls the cabinet believed that this action might spur other WesternEuropean governments to follow the example of London. TheForeign Office was hopeful that the signing of the North Atlantic



Treaty on 4 April would be the catalyst for co-operation betweenthe Western European governments in export control policy.

The Formation of CoCom

On 8 April the Board of Trade published a list of 153 items thatwere to be denied export licences in trade with the Soviet bloc.23

Although several OEEC governments had agreed in principle toplace restrictions on East–West trade, the United Kingdom wasthe only Western European nation to implement a domesticexport control programme by the spring of 1949. Inevitably, thiswas a source of concern in British government circles. Whilenegotiations on a common embargo continued throughout thespring and summer months, the discussions yielded little pro-gress. In the short-term the OEEC nations were not prepared toalter their existing trading relationships with Eastern Europeancountries, as they perceived economic requirements to outweighsecurity considerations. The failure of the negotiations did notbode well for the United Kingdom in two respects. First, withoutthe participation of other OEEC governments the British strate-gic embargo was rendered ineffectual given the availability ofstrategic materials from other Western European sources.Second, as trade controls forced manufacturers to pull out ofEastern bloc markets, Britain’s balance of payments positiontook a turn for the worse. Consequently, British traders began tolose their competitive edge over their continental counterparts inEastern Europe who were unhindered by export restrictions.24

According to recently declassified documents, the economic ministries in Whitehall were particularly distressed by the effectof the loss of East–West trade on Britain’s balance of payments.What compounded problems for Foreign Office officials was thefact that the Western European embargo effort, which had beenentrusted to London by the Truman administration, was clearlyfloundering. One diplomat referring to the slow progress of theOEEC negotiations remarked that ‘we are not much further forward and I think we will require a charge of dynamite to beapplied in due course if we are to get anything like real agree-ment’.25 Nevertheless, it was the impact of the export restrictionson the British economy that preoccupied the immediate concernsof the Attlee government during the second half of 1949.



The Foreign Office estimated that export controls on trade withthe Soviet bloc would result in the substantial loss to the Britisheconomy of key imports contained in trade agreements with several Eastern European government. As these imports wouldhave to be obtained from dollar sources, this would have theeffect of increasing the United Kingdom’s dollar drain byapproximately 125 million dollars. According to one ForeignOffice paper, this would produce a ‘crisis of first class dimen-sions’.26 Ordinarily, the loss of East–West trade, while significant,would not have had an adverse effect on the British economy. Butthe mild recession of 1948–9 in the United States together withthe massive trade imbalance between Washington and Londonincreased Britain’s dependency on non-dollar areas such as theSoviet bloc. Thus, unable to obtain these imports from the sterling area Whitehall had no alternative but to acquire essentialraw materials from dollar markets. This added to the worseningposition of the British balance of payments figures during thesummer. By September the United Kingdom’s dollar imbalanceforced the Attlee government to devalue sterling by 30 per centfrom $4.03 to $2.80.27 Infuriated by the persistent uncertaintythat plagued the embargo negotiations with the OEEC, theForeign Office reached the conclusion that as a result of the economic crisis Britain might have to dismantle its export-controlsystem.28

Yet, as the Cold War entered its most dangerous phase theFrench government followed Britain’s example by publishing alist of items to be prohibited in trade with the Soviet bloc.29 TheFrench decision was triggered by reports from Moscow that theSoviet Union had acquired the atomic bomb and that the Kremlinwas about to increase military expenditure in preparation for a‘hot’ war with the West. During September British and Frenchofficials held a series of talks in Paris aimed at securing theinvolvement of the Benelux nations and Italy in a multilateralexport-control programme. Anxious to achieve a concrete com-mitment from these governments, London proposed to bring the ECA into the negotiations, but Paris refused.30 Instead, thetwo delegations agreed to revise the A–F List to make it morepalatable to their continental partners. The new list omitted forty-eight items contained on the American 1-A list and was deemedby Britain and France to offer the best hope for forging an agree-ment on a common embargo.31



The communist victory in the civil war in China in Septemberonly heightened tensions between the Western alliance and theSoviet Union in Europe.32 Several OEEC nations includingBelgium, the Netherlands and Italy signified their intention tomeet British and French diplomats with a view to discussing thenewly revised A–F List. It had become apparent to these nationsthat the Soviet military threat necessitated that security con-siderations had to take preference over economic interests inEast–West trade. After considerable pressure from the Attleegovernment France reluctantly agreed to allow the United Statesto participate in the multilateral talks scheduled for October.While no ‘tangible progress’ ensued from the discussions, themeeting was conducted in a ‘friendly and co-operative’ atmos-phere. What did emerge from the talks, however, was the will-ingness of the OEEC participants to apply controls on a largeportion of the A–F List. Each of the delegations involvedexpressed support for an Anglo–American proposal to create an informal advisory group to monitor East–West trade. On this positive note the negotiations were adjourned pending furthertalks in November.33

On 14 November the six delegations met in Paris determinedto establish a multilateral embargo against the Soviet bloc.34 AsAmerican diplomats had withdrawn their objections to the A–FList as the basis for negotiating a multilateral export-control pro-gramme, it was agreed that the new embargo lists would not becomposed of items contained in the East–West trade agreementsof the Western European countries. The three new lists that werecreated during the discussion reflected both the security and tradeinterests of the participating governments. International List Icomprised 129 commodities of military and strategic value to theSoviet bloc; International List II was composed of one item controlled quantitatively; and International List III consisted oftwelve items to be monitored by the East–West trade group. Tofacilitate the multilateral implementation of the three lists aninformal East–West trade group was founded. A permanent co-ordinating committee (CoCom) situated in Paris and composedof technicians from the member governments was responsible formonitoring strategic shipments to the Soviet bloc. At the policylevel a consultative group (CG) would meet periodically to discuss policy and export-control strategy: this group was to bestaffed by civil servants from ministries in the participating



countries. In short, CoCom was to operate as a secret export control regime responsible for preventing the transfer of tech-nology and military hardware from the West to the Soviet bloc.35

It could be argued that the successful outcome of theNovember meetings was inspired by two factors: the participa-tion of American diplomats in the proceedings and the adoptionof the A–F List as the basis for drawing up the three internationalembargo lists.36 The presence of the ECA in the negotiationsundoubtedly broke the impasse that had frustrated the attemptsof the Attlee government to foster co-operation amongst theOEEC nations in the field of East–West trade controls. In thecase of Belgium, the Netherlands, Italy and France the threat offorfeiting Marshall aid coupled with the reports that Moscow wasprepared for open hostilities with the West precipitated a changein attitude towards trade with Eastern Europe. Yet, the role ofBritain in the formation of CoCom cannot be underestimated.Together with France, London tailored the American 1-A List toreflect the economic and security interests of the WesternEuropean governments. Most strikingly, it was the revised A–FList rather than the 1-A List that was used in the negotiations inNovember. Reticent OEEC governments were therefore assuredthat the embargo would not undermine the crucial trade agree-ments that they had signed with Eastern European governmentsin the aftermath of the Second World War.

Conflict and Confrontation: The Anglo–American Dispute over the 1-B List

In early January 1950 the new East–West trade group held itsinaugural meeting in Paris. The six founder members of CoComagreed unanimously to place restrictions on exports contained onthe three international lists bound for the Soviet bloc.37 Althoughthe export control programme had finally been established, theTruman administration wanted to commence negotiations on the1-B List immediately. It will be recalled that Britain and theUnited States decided that discussions on the 1-B List would notbe initiated until an agreement had been secured on the 1-A List.During the latter months of 1949 developments in the Cold Warhad convinced the State Department that controls on goods of secondary strategic significance should also be subject to a



multilateral embargo without delay. But Washington was to discover in the first half of 1950 that the Western Europeanmembers of CoCom, including Britain, were strongly opposed tothe extension of trade controls on semi-strategic or ‘dual purpose’commodities.

In acquiring the atomic bomb in the autumn of 1949 the SovietUnion posed a serious challenge to the United States in the inter-national system. No longer could Washington pursue its foreign-policy objectives behind the shield of nuclear military power. Thevictory of communist forces in the civil war in China also neces-sitated a re-evaluation of US policy in Asia. These challengeswere to produce a global response from the Truman administra-tion in the form of a militarized double containment strategy inEurope and Southeast Asia during 1950. The new strategy,which was explicitly stated in NSC-68, committed the UnitedStates to a massive military spending programme in preparationfor a period of tension short of war with the Soviet Union.38 ByJune the Truman administration would be presented with its firstopportunity to test its military capability with the outbreak ofhostilities in Korea. Inherent in the new policy was the provisionof a wide-ranging strategic embargo on East–West trade thatwould be linked to the Mutual Defence Assistance Programme(MDAP), the ERP and the US military programme.39 It was forthese reasons that the American delegation moved swiftly totable the 1-B List in CoCom.

Yet the 1-B List was to be a bone of contention that divided theAnglo–American partnership over embargo policy in the earlymonths of 1950. While the Attlee government welcomed thestrong military stance that Washington had taken against theSoviet Union, British ministers believed that the American pro-posals with respect to the 1-B List went too far. Perturbed by thenegative response of Whitehall to the 1-B List, officials at theAmerican Embassy in London asserted bluntly that if Britainfailed to follow Washington’s lead on export-control policy suchaction would prompt a deterioration in Anglo–American rela-tions.40 In particular, the State Department accused the ForeignOffice of putting trading opportunities ahead of the mutual security effort against the global forces of Soviet communism.Responding to these charges, British officials argued that theUnited States was trying to expand the embargo beyond the parameters agreed by CoCom, ‘in throwing in a number of addi-



tional candidates for 1-A treatment and suggesting far-reachingchanges in the treatment of 1-B items without concerting withus’.41 A clash between the two governments became inevitable asBritain refused to embargo items on the 1-B List of ‘dual pur-pose’. In other words, the Attlee government was determined toreject for control any industrial commodity that was exported inlarge volume to the Soviet bloc, even if the item could be used inthe production of military hardware or equipment. As far as ministers were concerned, Britain’s balance of payments situa-tion demanded reasonable levels of trade with Eastern Europe.Therefore, they were prepared to stand firm against the Ameri-can demands for a much broader embargo composed of militaryand industrial items.

On 8–9 May the Anglo–American rift over East–West tradesurfaced at the foreign ministers’ meeting in Paris. The Britishposition was fully endorsed by the French government. While themain purpose of the talks was to discuss a range of issues con-fronting the Western alliance spanning the Schuman Plan, theMiddle East and German rearmament, the embargo was the subject of some heated debate.42 The Secretary of State, DeanAcheson, reiterated the importance his government attached tothe 1-B List in light of the Soviet military build up. He reassuredBevin and Schuman that the Truman administration would notdiscourage trade in ‘peaceful commodities’ with the Soviet bloc,but that the Western European governments were expected toapply controls on items of semi-strategic value. Acheson went on to explain in some detail the objectives of the 1-B List.Essentially, he argued that 1-B List controls were a necessarymeasure to prevent the Soviet Union from stockpiling military‘production equipment’ for a future ‘hot’ war with the West.43

Acheson’s efforts to underscore the potential dangers of un-restricted trade in ‘dual purpose’ exports to the Soviet bloc fell ondeaf ears. Bevin suggested that the American 1-B proposals ‘weregetting dangerously close to the realms of economic warfare’. Hestressed that British and Western European economic recoverywould be impaired if CoCom were to expand the embargo toincorporate industrial items such as machine tools, for example,which were vital components in trade agreements with EasternEuropean governments. Rather than extend the scope of theexport control programme, Bevin argued for a ‘consolidation’ ofthe existing embargo that would enable CoCom to manage



East–West trade controls effectively in the short run. He pointedout that commercial contact with the Soviet bloc could help torebuild the Western European economies and thus strengthen theWestern alliance over the long haul. The foreign secretaryreceived fulsome support from Schuman who declared that theAmerican demands were ‘tantamount to large scale economicwarfare’ and ‘out of step’ with military co-ordination in the NorthAtlantic Treaty Organization (NATO).44 Nonetheless, the threestatesmen left the talks fundamentally divided on the issue ofEast–West trade; international embargo co-operation entered itsbleakest period thus far.

Compromise

The Anglo–French response to the 1-B List at the May talks wassymptomatic of the wider sense of Western European disgruntle-ment with the American demands in CoCom. When the ECAtried to table the 1-B List for discussion during a meeting ofCoCom on 15 May, the American proposal was resoundinglyrejected by the European members of the Paris group. With theexception of Britain, France and West Germany (the newestmember of CoCom) no European government was prepared toembargo a single item on the list. Disturbed by this reaction, theState Department pessimistically predicted that an agreement onthe 1-B List could not be possible while the Attlee governmentwas vehemently opposed to an expansion of East–West trade controls.45 The outbreak of war in Korea, however, was to alterWestern European perceptions of the military value of ‘dual purpose’ commodities to the Soviet Union.

The impact of the Korean War on the 1-B List negotiationsduring the summer of 1950 has been the subject of vigorousdebate in the historiography of the formative years of CoCom.For some scholars the outbreak of hostilities in Southeast Asiaforced the Western European governments to be more accom-modating to an expansion of the embargo in light of theirincreased vulnerability to Soviet military aggression.46 By con-trast, one line of enquiry has concluded that the Korean War hadlittle or no impact on the change in CoCom policy. Instead it isargued that the Western European governments only declaredtheir intention to add ‘dual purpose’ items to the embargo after



re-evaluating national security objectives in the autumn of1950.47 As records from American and British archives show,Western European attitudes to the 1-B List did change with theoutbreak of the Korean War, but not as markedly as some haveargued. While the Korean War forced the Western Europeans to concede that some dual-purpose commodities should berestricted in East–West trade, they steadfastly refused to adoptfor embargo the 1-B List in its entirety. A close examination of the tripartite talks on East–West trade in September andNovember reveals that Britain and France successfully preventedthe addition of non-strategic exports on to the international listsdespite intense pressure from Washington.

The subject of East–West trade was one of many importanttopics that were discussed during the crucial tripartite negotia-tions in New York in late September. Western defence issuessuch as the organization of NATO and German rearmamentwere high on the agenda as the three powers debated policyoptions in an effort to deal effectively with the threat of commu-nist military aggression in Asia and Eastern Europe.48 Britain, inparticular, had demonstrated its commitment to the Westernalliance in its readiness to participate in the Korean War andWestern European effort. Although the British economy was in afar from healthy state, ministers agreed to raise defence expendi-ture from 2.3 to 3.6 billion pounds during the following threeyears.49 By September the Attlee government had also retractedits opposition to the application of export controls on some itemson the 1-B List. Under pressure from the Conservative Party ledby Winston Churchill, the Labour government imposed restric-tions on the sale of machine tools to the Soviet bloc in view of theKorean conflict. Yet, the degree to which this domestic pressureinfluenced policy making should not be over-emphasized. Thecabinet had concluded in August that the changed internationalstrategic climate called for a tougher stand against the SovietUnion. An extension of East–West trade controls to selected‘dual purpose’ items was therefore deemed to be a necessarycourse of action.50 Thus, prior to attending the negotiations inNew York, London was more amenable to a moderate expansionof the embargo than it had been at the Paris talks in May.

After months of disunity the Truman administration also sawan opportunity to heal the rift with its allies over East–West tradeat the New York conference. Determined to avoid further



conflict over the 1-B List, Secretary of State Dean Acheson sug-gested that it was high time the three powers recede ‘from anyextreme positions and make the best compromise possible’.51 Asan avowed proponent of the Western alliance, Acheson was anxious to promote harmony in US–Western European relations.He believed that conflict over East–West trade would create disunity in the Atlantic community and strengthen the hand ofthe Soviet Union in Europe in the long run. Unlike the Paris talksin May the British and French delegations fully concurred withthe Secretary of State’s reasoning. Given their military depend-ence on the United States and recurring problems over the thornyissue of German rearmament, both London and Paris saw thewisdom of reaching a compromise on East–West trade withWashington.52 Having reached a common ground on the 1-BList, the three countries agreed to hold a series of meetings inOctober and November to review the scope and contents of themultilateral export-control programme.

The London tripartite talks in October and November were tothat date perhaps the most crucial negotiations in the history ofthe East–West trade embargo. During these meetings technicalexperts from Britain, the United States and France hammeredout an agreement on the 1-B List that would significantly alterthe character and objectives of the CoCom group. Residual tensions were still visible as the American delegation continuedto maintain the position that security considerations should takepriority over the economic value of particular items to theWestern European governments.53 By contrast, the British andFrench delegations fought hard to prevent non-strategic itemsfrom being placed on the international lists.54 On 20 Novemberan agreement that reflected both the security concerns of theTruman administration and the economic interests of the Britishand French governments was finally achieved. According to theagreed report of the negotiations, a ‘spirit of accommodation wassustained’ between the three governments and an export-controlprogramme of ‘an enduring character’ could now be estab-lished.55 On the basis of the tripartite agreement, the CoCommembership unanimously agreed to add a further 244 items tothe three international lists in January 1951.56 After two-and-a-half years of conflict and compromise a multilateral embargo on East–West trade had finally been established. While theembargo was primarily an American initiative, it undoubtedly



bore the hallmarks of the security and trade interests of the Attleegovernment.

Conclusion

It is possible to discern three distinct phases in the history ofBritish involvement in the negotiations leading to the establish-ment of a multilateral East–West trade embargo in the early yearsof the Cold War. During the first phase of the negotiations from September 1948 to January 1950, the Attlee governmentorganized the Western European response to the Truman admin-istration’s embargo initiative. In an effort to secure agreementwith its continental neighbours for a common export-control programme, London tailored the American 1-A List to reflectWestern European trade and security interests. The three inter-national lists created in November 1949 demonstrated the degreeto which Britain was able to modify the embargo demands of the United States in order to make limited East–West traderestrictions palatable to the Western European governments. Inthe second phase of the negotiations from January to September1950 the Truman administration clashed with its allies overexport controls on ‘dual purpose’ commodities. As the mostvocal critic of the 1-B List, the Attlee government emerged as theleader of the Western European opposition to the American proposal to expand the scope and nature of the multilateralembargo. The tripartite compromise that marked the third phaseof the negotiations from September to December 1950 high-lighted the bargaining leverage enjoyed by Britain in CoCom.While some items contained on the 1-B List were added to theembargo, the British and French governments ensured thatWestern European trade interests were protected by rejecting thewholesale expansion of the export-control programme envisagedby Washington.

Significantly, the evidence presented in this article dovetailswith the findings of recent research on British foreign policy during the formative years of the Cold War.57 As this newresearch has suggested, Britain was more than a mere ‘junior’partner in an alliance dominated by the United States. The Attleegovernment played an instrumental role in the creation of theWestern alliance and organized the Western European response



to the Marshall Plan. It also proved to be a valuable ally toWashington in the global containment of communism in South-east Asia and the Middle East. Most strikingly, as the issue of East–West trade illustrates, Britain exercised a moderatinginfluence over the United States and, at times, successfullymoulded American policy to suit the economic and security interests of Whitehall.

Notes

1. Melvyn P. Leffler, A Preponderance of Power: The Truman Administration,National Security and the Cold War (Stanford 1992), 62–3.

2. Alec Cairncross, Years of Recovery: British Economic Policy, 1945–51(London 1985), 61–83.

3. Wilson D. Miscamble, ‘The Foreign Policy of the Truman Administration:A Post-Cold War Appraisal’, Presidential Studies Quarterly Vol. 24 No. 3 (summer1994), 483–7.

4. Foreign Relations of the United States [hereafter FRUS] 1948 Vol. IV, 41–3,Marshall and Hoffman to Harriman, 27 August 1948.

5. Vibeke Sørensen, ‘Economic Recovery versus Containment: The Anglo–American Controversy over East–West Trade, 1947–51’ Co-operation and ConflictVol. 24 (1989), 74.

6. Public Record Office [hereafter PRO] FO 371/71884, memorandum byGore-Booth entitled ‘Points to be made to the ERP Administrator’, 23 April 1948;PRO FO 371/719323, letter from Welch, Board of Trade, to Makins, 6 August1948.

7. PRO FO 371/71923, memorandum of conversation between Makins andBliss, American Embassy, London, 29 May 1948.

8. National Records and Archives Administration, College Park, Maryland[hereafter NARA] RG 489 S-13123, box 118 (USSR), copy of ‘The UnitedKingdom and East–West Trade’ by the Central Office of Information, London, 6May 1954.

9. PRO FO 371/71654/N 223, protocol of the British–Soviet trade and finan-cial agreement, 27 December 1947.

10. PRO FO 371/71923, note of meeting in the Foreign Office to discuss sec-tion 117 (d) of the Mundt Amendment to the Economic Co-operation Act of 1948,10 August 1948.

11. John Baylis, The Diplomacy of Pragmatism: Britain and the Formation ofNATO, 1942–49 (Ohio 1993), 63–75; Jan Melissen and Bert Zeeman, ‘Britain andWestern Europe, 1945–51: Opportunities Lost?’, International Affairs Vol. 63 No.1 (Winter 1986–7), 88–91; Avi Shlaim, ‘Britain, the Berlin Blockade and the ColdWar’, International Affairs Vol. 60 No. 1 (Winter, 1983–4), 1–14.

12. Alan P. Dobson, The Anglo–American Economic Special Relationship,1940–87 (Brighton 1988), 127–9.

13. PRO FO 371/71926/UR 7793, EPC (48) 93, report of the EconomicPolicy Committee meeting, 20 November 1948.



14. PRO CAB 134 (216) 40, minutes of the cabinet meeting, 14 December1948.

15. PRO CAB 134 (216), memorandum of EPC meeting on UK position withrespect to US proposals, 23 November 1948.

16. PRO FO 371/77789/UR 462, report of OEEC meeting by UK delegation,Paris, 17 January 1949.

17. Sean Greenwood, Britain and the Cold War, 1945–91 (London 2000),38–72.

18. John W. Young, Britain, France and the Unity of Europe, 1945–51 (Leicester1984), 55–128.

19. PRO FO 371/777/UR 820, report by UK representatives on discussionwith France on the restriction of export to the Soviet bloc, 7 February 1949.

20. FRUS 1949 Vol. V, 79, telegram from Hoffman to Harriman, 9 February1949.

21. PRO FO 371/77789/UR 727/45/48, telegram from Gore-Booth toCoulson, Paris, 25 January 1949.

22. PRO FO 371/77792, EPC (49) 17, paper entitled ‘Economic Policytowards Eastern Europe’, 10 March 1949; PRO FO 371/77793, brief for the sec-retary of state in the Foreign Office, 14 March 1949.

23. PRO FO 371/77791, memorandum by the President of the Board of Tradeon section 117 (d) of the Economic Co-operation Act of 1948, undated; PRO FO371/77792, letter from Ministry of Defence to Foreign Office on the review of theUS 1-A list, 11 March 1949; PRO FO 371/77794, telegram from CommonwealthRelations Office to Commonwealth countries, 31 March 1949.

24. PRO FO 371/77797, report of the London Committee, Foreign Office, 1June 1949.

25. PRO FO 371/77793, telegram from Coulson, Paris, to Rob, ForeignOffice, 21 March 1949.

26. PRO FO 371/77797, report of the Economic Intelligence Department,Foreign Office, 8 June 1949.

27. For an excellent account of the devaluation crisis, see Edmund Dell, TheChancellors: A History of the Chancellors of the Exchequer, 1945–90 (London1996), 113–29.

28. PRO FO 371/77804, telegram from Foreign Office to OEEC delegation,Paris, 3 September 1949.

29. PRO FO 371/77806, E.R. London (49) 252, report of the EuropeanEconomic Co-operation Committee on East–West trade, Foreign Office, 12September 1949.

30. PRO FO 371/77806, telegram from OEEC delegation, Paris, to ForeignOffice, 26 September 1949; PRO FO 371/77808, telegram from OEEC delega-tion, Paris, to Foreign Office, 30 September 1949.

31. PRO FO 371/77809, telegram from Duke, OEEC delegation, Paris, toForeign Office, 6 October 1949.

32. Sergei N. Goncharov, John W. Lewis and Xue Litai, Uncertain Partners:Stalin, Mao and the Origins of the Korean War (Stanford 1993), 212.

33. FRUS 1949 Vol. V, 150–2, telegram from Harriman to Hoffman, 15October 1949; PRO 371/77811, telegram from OEEC delegation, Paris, toForeign Office, 17 October 1949.

34. PRO FO 371/77815, report by OEEC delegation, Paris, on East–West



trade negotiations of 14–21 November, 29 November 1949.35. FRUS 1949 Vol. V, 174–6, telegram from Katz, Paris, to Hoffman, 25

November 1949; PRO FO 371/77816, report on list of production for export control to Eastern Europe, 21 November 1949.

36. FRUS 1949 Vol. V, 177–8, telegram from Acheson to Harriman, 7December 1949.

37. FRUS 1950 Vol. IV, 67–8, telegram from Harriman to Hoffman, 13January 1950.

38. FRUS 1950 Vol. I, 232–40, paper presented to the National SecurityCouncil (NSC-68), 14 April 1950.

39. NARA RG 59 460.509/4-2150, memorandum by Hilton, StateDepartment, 21 April 1950; NARA RG 59 460.509/5-550, FMACC D-36/1,Foreign Military Assistance Co-ordinating Committee, 5 May 1950.

40. PRO FO 371/87197, telegram from American Embassy, London, toForeign Office, undated.

41. PRO FO 371/87197, telegram from Foreign Office to OEEC delegation,Paris, 20 April 1950; PRO FO 371/87197, record of informal meeting betweenMakins and French representatives on East–West trade, 30 March 1950.

42. Dean Acheson, Present at the Creation: My Years in the State Department(New York 1969), 393–6.

43. NARA RG 59 460.509/5-450, paper on economic situation for May foreign ministers’ meeting, 20 April 1950; NARA RG 59 460.509/6-550, posi-tion paper on East–West trade discussion for May foreign ministers’ meeting,undated.

44. FRUS 1950 Vol. IV, 116–22, memorandum by associate chief of economicresources and security staff on tripartite meeting, undated.

45. FRUS 1950 Vol. IV, 132–3, telegram from Webb, State Department toBruce, American Embassy, Paris, 20 May 1950.

46. For example see Michael Mastanduno, Economic Containment: CoCom andthe Politics of East–West Trade (Ithaca 1992), 86–91, and Vibeke Sørensen,‘Defence without Tears: US Embargo Policy and Economic Security in WesternEurope, 1947–51’, in Francis H. Heller and John R. Gillingham, eds, NATO: TheFounding of Atlantic Alliance and the Integration of Europe (New York 1992),263–6.

47. Tor Egil Førland, Waging Cold Economic Warfare: The Creation and Primeof CoCom, 1948–54 (unpublished DPhil Thesis, University of Oslo, 1991), 33–4.

48. For an overview of the New York meetings, see Saki Dockrill, Britain’sPolicy for West German Rearmament, 1950–55 (Cambridge 1991), 21–40.

49. Geoffrey Warner, ‘The British Labour Governments and the AtlanticAlliance, 1949–51’, in Olav Riste, ed., Western Security: The Formative Years(Oslo 1985), 247–65.

50. PRO CAB 129/42, CP (50) 201, paper by Shinwell, 31 August 1950.51. NARA RG 59 460.509/9-1150, telegram from Acheson to the American

Embassy, London, 11 September 1950.52. Vibeke Sørensen, ‘Economic Recovery versus Containment’, 83–4.53. NARA RG 59 460.509/10-1350, position paper for Bohlen for tripartite

discussions on security export controls in London, 13 October 1950.54. PRO FO 371/87200, telegram from Foreign Office to British Embassy,

Washington DC, 5 October 1950; PRO FO 371/87201, memorandum on



East–West trade prepared by Mutual Aid Department, Foreign Office, 30 October1950.

55. FRUS 1950 Vol. IV, 240, agreed report on the London tripartite conversa-tions on security export control, 20 November 1950.

56. FRUS 1951 Vol. 1, 1012, editorial note.57. For an appraisal of this scholarship, see David Reynolds, ‘Great Britain’, in

David Reynolds, ed., The Origins of the Cold War in Europe: InternationalPerspectives (New Haven 1994), 77–95.

Ian Jackson

is a lecturer in International Relations at DeMontfort University. He is the author of TheEconomic Cold War: America, Britain andEast–West Trade, 1948–63 (Palgrave, 2001)and several articles on international tradeissues during the Cold War.



Documents

‘Rival Desirabilities’: Britain, East–West Trade and the