Sir,

I have the honour to refer to Canadian policy on exports to Communist China of potential war material. As .you know, this material has been considered in three categories:

arms and ammunition;

machinery and its components and material used primarily for military purposes (United States IA list); and

machinery and its components and materials that may be used for both civilian and military purposes (United States 1B list).¹⁴

2. We now completely prohibit the export to Communist China of munitions and 1A materials, and shall continue to do so, but the Department of Trade and Commerce here has been receiving various enquiries from firms who wish to ship to China goods which come under the United States 1B list.

3. Shipments to Eastern Europe of materials on the 113 list have been allowed if such shipments have been part of normal trade, if the quantities are reasonably normal, and if the Department of Trade and Commerce has reasonable assurance that these exports are in fact destined for civilian and not military use. Our criteria for approving such shipments to China will remain the same as that for shipments to Eastern Europe. To some extent, these criteria will have to be applied to shipments of strategic materials to Hong Kong, as there is much trans shipment to Communist China from Hong Kong. The quantities of materials normally used by Hong Kong will be determined so that we may have some idea of what proportion of goods shipped to Hong Kong is actually trans shipped to Communist China.

4. Taking into consideration however the slighter possibility of trans shipment of these goods to the U.S.S.R. from China and the probability that China will be an important market for products of Japanese heavy industry, officials of Trade and Commerce will be less strict in their interpretation of these criteria when considering shipments to Communist China.

5. It seems likely, therefore, that, in our method of control of exports to China, we will not, for the time being, follow United States practice as closely as we have in dealing with other problems of export control; our practice in this instance will probably be more similar to that of the United Kingdom.

6.I understand that the United Kingdom and the United States have been discussing a joint approach to France, Belgium and the Netherlands regarding prohibition of the export to China of strategic materials in the United States 1A list; that the United Kingdom have agreed to co operate with the United States and the Netherlands on the questions of control of exports of petroleum to China, and that they have agreed to watch the quantities of shipments to China of goods which are on the 1B list.

7. We were informed by the Canadian Ambassador in Washington that there was some difference of opinion between the United Kingdom and the United States on the wording and form of the communication which should go to the three European Governments concerning the prohibition of exports of the IA items, and I note that at the Paris meetings in January on the control of exports to Eastern Europe, the delegates of the United States and the United Kingdom stated that they were not in a position to discuss export controls to China.

8. I should be glad to have from you some indication of the progress the United Kingdom and the United States are making in these informal approaches and of the present United Kingdom practice with regard to shipments to China of items on the 1B list.

I have, etc.
A.F.W. PLUMPTRE
for Secretary of State for External Affairs

¹⁴ Voir le document 950./See Document 950.