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Trade as a strategic weapon: American and alliance export control policy in the early postwar period

Published online by Cambridge University Press:  22 May 2009

Michael Mastanduno
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The study of postwar American foreign economic policy recently has been informed by a dual conventional wisdom: that the American state is relatively weak domestically, yet powerful internationally. Domestic weakness refers to the ability of private actors to penetrate and influence the state; to the institutional fragmentation and decentralization of the state apparatus; and to the difficulties state officials encounter in extracting resources from domestic society and in achieving their policy preferences in the face of domestic opposition. International strength, on the other hand, refers to the high degree of resources controlled by the United States relative to other nation-states, and to the ability of state officials to translate those resources into influence over international outcomes. In the early postwar period, America's external strength more than compensated for its internal weakness, and enabled state officials to pursue effectively their primary foreign economic policy objective: the creation of a liberal international economic order, characterized by the free movement of goods and capital across borders and by stable exchange rates.

Type
Research Article
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International Organization , Volume 42 , Issue 1 , Winter 1988 , pp. 121 - 150
Copyright
Copyright © The IO Foundation 1988

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References

An early version of this article was presented at the 1985 Meeting of the American Political Science Association. For comments and suggestions, I am grateful to Valerie Bunce, Beverly Crawford, Jeff Frieden, Joanna Gowa, Cynthia Hody, John Ikenberry, David Lake, Melanie Mastanduno, Timothy McKeown, John Odell, four anonymous reviewers for IO and the participants at the University of Chicago's Program on Interdependent Political Economy session on 29 April, 1987. I also acknowledge Hamilton College and the Institute for the Study of World Politics for financial support.

1. In this article the state is defined as the executive branch of the U.S. government. Unless otherwise noted, state officials refer to the president and his central foreign policy advisors. To minimize verbal monotony, I use “state officials,” “U.S. officials,” and “executive officials” interchangably. These definitions are similar to those employed by Krasner, Stephen in Defending the National Interest (Princeton, N.J.: Princeton University Press, 1978).Google Scholar

2. For the characterization of the United States as a weak state, see Krasner, Stephen, “United States Commercial and Monetary Policy: Unravelling the Paradox of External Strength and Internal Weakness,”Google Scholar and Katzenstein, Peter, “Conclusion: Domestic Structures and Strategies of Foreign Economic Policy,” in Katzenstein, , ed., Between Power and Plenty (Madison: University of Wisconsin Press, 1978), pp. 51–88, and 295–336Google Scholar. See also Nettl, J. P., who notes the low level of American “stateness,” in “The State as a Conceptual Variable,” World Politics 20 (07 1968), pp. 559–92.CrossRefGoogle Scholar

Though it should be apparent as the argument develops, I should clarify that I use the terms “strength” and “weakness” to refer primarily to the ability of state officials to achieve their preferred political outcomes in the face of domestic or international opposition. On the domestic side, I examine the ability of state officials to pursue economic warfare as American strategy and avoid coercion in their efforts to coordinate that strategy internationally. On the international side, I assess the ability of state officials to gain alliance support for economic warfare. Since the latter task was by far the most difficult of the three, most of the analysis of this article is devoted to examining it.

3. Krasner makes this argument in “U.S. Commercial and Monetary Policy,” note 2, pp. 52–53. See also Gilpin, Robert, U.S. Power and the Multinational Corporation (New York: Basic Books, 1975)CrossRefGoogle Scholar; Maier, Charles, “The Politics of Productivity: Foundations of American International Economic Policy After World War Two,” in Katzenstein, , ed., Between Power and Plenty, pp. 23–50Google Scholar; and Block, Fred, The Origins of International Economic Disorder (Berkeley: University of California Press, 1977)Google Scholar, for discussions of the use of American power to restructure the postwar world economy.

4. See Mastanduno, Michael, “Strategies of Economic Containment: U.S. Trade Relations with the Soviet Union,” World Politics 37 (07 1985), pp. 503–31.CrossRefGoogle Scholar

5. Kennan's, comments are found in the infamous “long telegram” of 1946, reprinted in Foreign Relations of the United States (hereafter FRUS), vol. 6 (1946), pp. 696–709Google Scholar, citation at 706–7. For a discussion of the early postwar interest of state officials in “containment by integration,” see John Lewis, Gaddis, Strategies of Containment: A Critical Appraisal of Post war American National Security Policy (New York: Oxford University Press, 1982), pp. 9–17.Google Scholar

6. A more detailed discussion of the logic of these two strategies is found in Mastanduno, , “Strategies of Economic Containment,” pp. 506–14.Google Scholar

7. This vision is most clearly articulated in Kennan's long telegram (see note 5) and in NSC 68: “Report to the National Security Council by the Executive Secretary” 14 April 1950, reprinted in FRUS, vol. 1 (1950), pp. 234–92.Google Scholar

8. Telegram from the secretary of state to the U.S. embassy in the United Kingdom, 22 August 1950, reprinted in FRUS, vol. 4 (1950), pp. 174–76.Google Scholar

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10. Ibid., p. 117, and “Trade of the Free World with the Soviet Bloc,” report prepared by the Economic Cooperation Administration, February 1951, reprinted in FRUS, vol. 1 (1951), pp. 1042–45.Google Scholar

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12. See, for example, Medlicott, W. M., The Economic Blockade, vol. 2 (London: HMSO, 1959), pp. 660–61.Google Scholar

13. In addition to Krasner, , “External Strength and Internal Weakness,”Google Scholar studies that highlight the primacy of interest groups and Congress in trade policy include the classic by Schattschneider, E. E., Politics, Pressure and the Tariff (Englewood Cliffs, N.J.: Prentice-Hall, 1935)Google Scholar and more recently, Cassing, James et al. , “The Political Economy of the Tariff Cycle,” American Political Science Review 80 (09 1986), pp. 843–62CrossRefGoogle Scholar. An alternative, statist approach is taken in this volume by David Lake.

14. This point is well described by Jentleson, Bruce W., “From Consensus to Conflict: The Domestic Political Economy of East-West Energy Trade Policy,” International Organization 38 (Autumn 1984), pp. 625–60, at 635–36.CrossRefGoogle Scholar

15. See, for example, the statements of corporate officials in U.S. Congress, Senate, Committee on Governmental Operations, Permanent Subcommittee on Investigations, East-West Trade, hearings, 84th Congress, 2d session, 15–17 February and 6 March 1956.

16. See Gunnar, Adler-Karlsson, Western Economic Warfare, 1947–1967 (Stockholm: Almqvist & Wiksell, 1968), p. 33.Google Scholar

17. Berman, Harold J. and Garson, John R., “United States Export Controls—Past, Present and Future,” Columbia Law Review 67 (05 1967), pp. 791–890CrossRefGoogle Scholar, citation at 792. Also cited by Jentleson, , “From Consensus to Conflict,” p. 635.Google Scholar

18. On the initial U.S. control lists, see Report of the Ad Hoc Subcommittee to the Secretary of Commerce, 4 May 1948, reprinted in FRUS, vol. 4 (1948), pp. 536–42Google Scholar, and the telegram from the secretary of state to certain diplomatic offices, 26 April 1950, reprinted in FRUS, vol. 4 (1950), pp. 87–93.Google Scholar

19. While all three agencies agreed about American strategy, occasionally differences surfaced over how to deal with Western Europe's trade with the East. During the early part of 1950, commerce and defense officials, for example, were frustrated over the reluctance of the allies to cooperate fully in CoCom and suggested the use of coercion if negotiations at the highest levels of government proved futile. See, for example, the memo from the secretary of commerce to the NSC, 25 April 1950, reprinted in FRUS, vol. 4 (1950), pp. 84–85Google Scholar. As this discussion shall indicate, the position of the State Department—that coercion should not be employed—ultimately defined U.S. policy.

20. See, for example, the comments of Commerce Secretary Sinclair Weeks in the memorandum of discussion at the 197th meeting of the National Security Council, 13 May 1954, reprinted in FRUS, vol. 1 (1952–1954), pp. 1159–66.Google Scholar

21. West European preferences are discussed in a telegram from the U.S. ambassador in France to the acting secretary of state, 19 January 1949, reprinted in FRUS, vol. 5 (1949), p. 69Google Scholar, and in Economic Cooperation Administration, “Trade of the Free World,” p. 1043.Google Scholar

22. U.S. officials did recognize the importance of maintaining some degree of East–West trade in Europe, in the interest of European recovery. They estimated that during the European Recovery Program, Western Europe would need to import $5–6 billion from Eastern Europe, and export a commensurate amount to the East. See Report of the Ad Hoc Subcommittee of the Advisory Committee of the Secretary of Commerce, 4 May 1948, reprinted in FRUS, vol. 4 (1948), pp. 536–42Google Scholar, citation at 537. See also William, Diebold, “East-West Trade and the Marshall Plan,” Foreign Affairs 26 (07 1948), pp. 709–22.Google Scholar

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24. List 1A contained items of direct military utility and those which contained advanced technology. List 1B contained items of general industrial significance. As of early 1950, there were 167 items on the former list, and about 300 on the latter. See the sources cited in note 18.

25. On the origins of CoCom, see the telegram from the special representative in Europe for the Economic Cooperation Administration (ECA) (Harriman) to the administrator of the ECA (Hoffman), 15 October 1949, reprinted in FRUS, vol. 5 (1949), pp. 150–53Google Scholar, citation at 150; and the telegram from the secretary of state to certain diplomatic offices, 26 April 1950, reprinted in FRUS, vol. 4 (1950), pp. 87–93.Google Scholar

26. Telegram from the secretary of state to certain diplomatic offices, 15 February 1950, reprinted in FRUS, vol. 4 (1950), pp. 81–82.Google Scholar

27. The relationship between CoCom and NATO is discussed in a telegram from the U.S. embassy in the United Kingdom to the secretary of state, 8 March 1951, reprinted in FRUS, vol. 1 (1951), pp. 1056–58.Google Scholar

28. Adler-Karlsson, , Western Economic Warfare, p. 45Google Scholar, italics added.

29. Klaus, Knorr, The Power of Nations (New York: Basic Books, 1975), p. 142.Google Scholar

30. U.S. Congress, Office of Technology Assessment, Technology and East-West Trade (Washington, D.C.: GPO, 1979), pp. 114, 154.Google Scholar

31. Stephen, Woolcock, Western Policies on East-West Trade (London: Royal Institute for International Affairs, 1982), p. 8Google Scholar; and Gary, Bertsch, East-West Strategic Trade, CoCom and the Atlantic Alliance (Paris: Atlantic Institute for International Affairs, 1983), p. 10.Google Scholar

32. See Ellings, Richard J., Embargoes and World Power (Boulder: Westview, 1985), pp. 80–84Google Scholar; Beverly, Crawford and Stephanie, Lenway, “Decision Modes and International Regime Change: Western Collaboration on East-West Trade,” World Politics 37 (04 1985), pp. 375–402Google Scholar, citation at 388, and Jentleson, Bruce W., Pipeline Politics (Ithaca, N.Y.: Cornell University Press, 1986), pp. 71–72.Google Scholar

33. The amendments are reprinted in Adler-Karlsson, , Western Economic Warfare pp 26–27, and 200.Google Scholar

34. The text of Public Law 213, 82d Congress, is reprinted in Mutual Defense Assistance Control Act of 1951, Reports to the Congress, hereafter Battle Act Reports, No. 1 15 October 1952, Appendix A.

35. See the telegram to the administrator of the ECA, 12 May 1949, reprinted in FRUS, vol. 5 (1949), pp. 113–14Google Scholar, and the telegram from the secretary of state to the embassy in France, 13 April 1950, reprinted in FRUS, vol. 4 (1950), pp. 81–82.Google Scholar

36. Ibid., pp. 81–82.

37. See the letter from Acheson to the chairman of the Senate Foreign Relations Committee, 9 June 1952, reprinted in FRUS, vol. 1 (1952–1954), pp. 847–49.Google Scholar

38. For a discussion of the role of CoCom secrecy in the interbranch dispute, see the letter from Representative Battle, Laurie C. to the director of Mutual Security, 29 September 1952, reprinted in FRUS, vol. 1 (1952–54), pp. 896–901.Google Scholar

39. For the Senate debate over the Battle Act, see Congressional Record (Senate), 27 August 1951, pp. 10661–78, an 10700–15.

40. A good discussion is found in Ted, Carpenter, America and the Transformation of NATO: The Great Debate of 1950 and 1951 (unpublished manuscript, 1986)Google Scholar, especially chaps. 5 and 6.

41. See “N.S.C. Determinations Under Public Law 843, Section 1304: The Cannon Amend- ment,” Statement of Policy by the National Security Council, undated, included in a note from the executive secretary of the NSC to the NSC and reprinted in FRUS, vol. 4 (1950), pp. 249–55Google Scholar. The quotation is at p. 254.

42. A list of the countries granted exceptions, with supporting arguments, is found in Report by the N.S.C. Regarding a Review of its Determination under Section 1302 of the Third Supplemental Appropriations Act, 1951, 23 October 1951, reprinted in FRUS, vol. 1 (1951), pp. 1203–10.Google Scholar

43. The exception clause is found in Mutual Defense Assistance Control Act of 1951 (Public Law 213, 82d Congress), Section 103. Senator John Sparkman, a key member of the Foreign Relations Committee who was sympathetic to the need for some executive flexibility, was pivotal in swinging the Senate behind the Battle Bill and away from a more hardline proposal by Senators Kem, Wherry and Malone, which would have removed all executive discretion. See the Senate debate, Congressional Record (note 39).

44. See Battle Act Reports, No. 1, 15 October 1952, pp. 47–57Google Scholar; No. 2, 16 January 1953, pp. 77–86; and No. 3, 27 September 1953, pp. 73–77.

45. Telegram from the U.S. ambassador in Britain to the secretary of state, 16 July 1951, reprinted in FRUS, vol. 1 (1951), pp. 1148–49Google Scholar, and from the U.S. ambassador in France to the secretary of state, 20 July 1951, reprinted in Ibid., pp. 1157–58.

46. Memorandum to the executive secretary of the NSC, 22 September 1952, reprinted in FRUS, vol. 1 (1952–1954), p. 882Google Scholar; and memorandum to the executive secretary of the NSC, 19 January 1953, reprinted in Ibid., p. 937.

47. A good recent discussion that emphasizes multilateralism as the dominant theme in U.S. national security policy is Robert, Pollard, Economic Security and the Origins of the Cold War, 1945–1950 (New York: Columbia University Press, 1985).Google Scholar

48. See, for example, statement of policy by the National Security Council on Economic Defense (NSC 152/2), 31 July 1953, reprinted in FRUS, vol. 1 (1952–1954), pp. 1009–14, citation at 1010.Google Scholar

49. See Robert, Osgood, NATO: The Entangling Alliance (Chicago: University of Chicago Press, 1962), p. 69Google Scholar. Osgood provides one of the best discussions of the impact of Korea on Western perceptions. The perceived shift in Soviet methods is also noted in “A Proposal for Strengthening Defense without Increasing Appropriations,” 5 April 1950, enclosed in a memo from the undersecretary of the army to the secretary of state, 10 April 1950, reprinted in FRUS, vol. 3 (1950), pp. 43–48.Google Scholar

50. Osgood, , NATO: The Entangling Alliance, pp. 37, 68–69Google Scholar. The fear of attack may not have been well founded, but as Osgood notes, “the estimate of a potential aggressor's intentions is peculiarly subject to sudden shifts from complacency to alarm” (p. 68).

51. See Bernard, Brodie, War and Politics (New York: Macmillan, 1973), pp. 63–64Google Scholar; Carpenter, America and the Transformation of NATO, pp. i–ii; and “East–West Trade Controls in Relation to the Upcoming Foreign Ministers' Meeting,” Guidance Paper for the Use of the U.S. Delegation to the Four Power Foreign Ministers' Meeting, Geneva, October 1955, dated 5 October 1955, annex 4, p. 2.

52. See the Agreed Minute of the United States, British, and French Foreign Ministers, 19 September 1950, reprinted in FRUS, vol. 4 (1950), pp. 187–88Google Scholar, and Osgood, , NATO: The Entangling Alliance, pp. 65–68Google Scholar. U.S. officials had struggled, with little success, to get the allies to accept a reordering of priorities before Korea. See “Building Up the Defensive Strength of the West,” 3 May 1950, paper presented in the Office of European Regional Affairs, as back-ground for the May North Atlantic Council Meetings, reprinted in FRUS, vol. 3 (1950), pp. 85–90Google Scholar, relevant discussion at 86.

53. Osgood, , NATO: The Entangling Alliance, pp. 40–41.Google Scholar

54. The impact of Korea on West European receptivity to economic warfare is discussed in “State Department Position with Respect to Export Controls and Security Policy,” report by the executive secretary to the NSC, 21 August 1950, reprinted in FRUS, vol. 4 (1950), pp. 163–72Google Scholar, relevant discussion at 170.

55. “Report to the President on United States Policies and Programs in the Economic Field which May Affect the War Potential of the Soviet Bloc,” enclosed in a letter from Acheson to Truman, 9 February 1951, reprinted in FRUS, vol. 1 (1951), pp. 1026–35Google Scholar, relevant discussion at 1027.

56. See the Agreed Minute of the Foreign Ministers (note 52), pp. 187–88, emphasis added.

57. The definition is found in the Guidance Paper (note 51), p. 4.

58. The results are reported in an editorial note, printed in FRUS, vol. 1 (1951), p. 1012.Google Scholar

59. Churchill is cited by Harold Stassen in U.S. Congress, Senate, Committee on Government Operations, Permanent Subcommittee on Investigations, East–West Trade, hearings, 84th Congress, 2d session, 15–17, 20 February and 6 March 1956, p. 450.

60. British proposals are discussed in the notes from the ambassador in the U.K. to the government of the U.K., 3 December 1953, and to the Department of State, 1 March 1954, both reprinted in FRUS, vol. 1 (1952–1954), pp. 1062–64 and 1082–84.Google Scholar

61. The U.S. position is described in the telegram from the Chief of Operations Mission in the U.K. to the Department of State, 10 November 1953, reprinted in FRUS, vol. 1 (1952–1954), pp. 1039–49Google Scholar, and in the note from the U.S. ambassador to the government of the U.K. (note 60), pp. 1063–64.

62. CoCom List I was reduced from 270 to 167 items; List II from 80 to 23 items; and List III, the surveillance list, from 124 to 62 items. The final results are discussed in the memorandum of discussion at the 210th meeting of the National Security Council, 1 August 1954, and the Report to the N.S.C. by the Secretary of State and Director of Foreign Operations, 30 August 1954, both reprinted in FRUS, vol. 1, (1952–1954), pp. 1235–55.Google Scholar

63. Battle Act Reports, No. 5, 23 November 1954, p. 43.Google Scholar

64. Adler-Karlsson, , Western Economic Warfare, p. 47.Google Scholar

65. See Osgood, , NATO: The Entangling Alliance, pp. 106–16, and 125Google Scholar. The nuclear strategy did not call for the replacement of conventional forces, but for the integration of tactical nuclear weapons into existing NATO units.

66. Statement of John, Barton, Department of Commerce, in East–West Trade (note 59), p. 356.Google Scholar

67. See the Memorandum of Discussion at the 197th Meeting of the National Security Council, 13 May 1954 (note 20), p. 1063.

68. “East–West Trade Controls” (note 51), annex 4, p. 2.

69. Battle Act Reports, No. 5, 23 November 1954, p. 11.Google Scholar

70. On copper and petroleum, see East–West Trade (note 59), pp. 240 and 420.

71. See the National Intelligence Estimate, “Consequences of a Relaxation of Non-Communist Controls on Trade with the Soviet Bloc,” 23 March 1954, reprinted in FRUS, vol. 1 (1952–1954), pp. 1121–35, citation at 1131.Google Scholar

72. The 1954 revision left the CoCom List at 252 items; the U.S. control list, prior to its adjustment, contained 474 items (the pre-revision CoCom figure), plus 113 more controlled unilaterally by the United States. See “United States Security Export Controls,” Report for the NSC by the NSC Planning Board, 11 June 1954, reprinted in FRUS, vol. 1 (1952–1954), pp. 1191–97.Google Scholar

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75. U.S. officials successfully persuaded other CoCom members to improve their enforcement of export controls, as a tacit exchange for shorter lists. See Battle Act Reports, No. 5, 23 November 1954.

76. Battle Act Reports, No. 10, 24 January 1958, pp. 15–18.Google Scholar

77. Memorandum of Discussion at the 210th Meeting of the NSC, 12 August 1954, reprinted in FRUS, vol. 1 (1952–1954), pp. 1235–39, citation at 1237.Google Scholar

78. The best evidence of congressional discontent is found throughout the Senate Committee on Governmental Operations hearings, East–West Trade (note 59).

79. Useful discussions of hegemonic stability theory are found in Robert, Keohane, After Hegemony (Princeton, N.J.: Princeton University Press, 1984), chaps. 3 and 9Google Scholar, and also Duncan, Snidal, “The Limits of Hegemonic Stability Theory,” International Organization 39 (Autumn 1985), pp. 579–614.Google Scholar

80. See David, Baldwin, “Power Analysis and World Politics: New Trends versus Old Tendencies,” World Politics 31 (01 1979), pp. 161–94Google Scholar, and Robert, Keohane, “Theory of World Politics: Structural Realism and Beyond,” in Keohane, , ed., Neorealism and its Critics (New York: Columbia University Press, 1986), pp. 158–203Google Scholar, especially pp. 182–89.

81. An interesting examination of the idea that weaker alliance members may derive bargaining leverage over their dominant partners is Valerie, Bunce, “The Empire Strikes Back: The Transformation of the Eastern Bloc from a Soviet Asset to a Soviet Liability,” International Organization 39 (Winter 1985), pp. 1–46.Google Scholar

82. Reagan administration officials, of course, dispute this lesson and claim the pipeline dispute was actually constructive, because it sensitized Western Europe to the security risks of East–West trade. While there may be a kernel of truth in this, it is hard to deny that the administration was compelled to back down by the fear of maintaining a rupture in the alliance that threatened other areas of policy (e.g., the Euromissile deployment).

83. See Krasner, , “External Strength and Internal Weakness.”Google Scholar

84. For a discussion of the breakdown of the U.S. domestic consensus by the 1970s, see Jentleson, , “From Consensus to Conflict” and Pipeline Politics.Google Scholar