Trade Controls of Free World Countries
This appendix summarizes, in accordance with section 302 (b) of the Battle Act, the trade control measures of most of the important mercantile countries of the free world, as well as of several others for which there is new information to report. These descriptions supplement the main text of this report and similar appendices contained in previous Battle Act reports.
The main features of the trade-control systems of most free-world countries were originally established to deal with such problems as foreign-exchange control, conservation of goods in short supply, and directing foreign trade to particular currency areas. For most countries security trade controls have been inlaid in these general economic controls and are exercised through them, using the same basic techniques of export licensing and customs inspection as in export control for other purposes. Thus they are closely connected administratively with them.
The details of security trade controls of almost all countries have a security classification. Thus these descriptions must, in a public report, be presented in somewhat general terms.
To avoid duplication, this appendix does not include countries which were included in the appendix of previous Battle Act reports and for which there is no substantial new information on security trade controls which can be reported publicly. Summaries of export controls employed by Thailand and Yugoslavia are given on pages 64 and 69, respectively, of the third Battle Act report. The second Battle Act report contains summaries pertaining to Bolivia, Colombia, Ecuador, Panama and Peru on pages 64-66, and to Indo-China, The Philippines and Lebanon on pages 66, 68 and 71, respectively. Summaries concerning Argentina, Brazil, Chile, Mexico and Venezuela are contained in pages 62-66 of the first Battle Act report, as well as Austria (p. 66), Iceland (p. 70), Afghanistan (p. 75), Burma (p. 76), China (Formosa) (p. 76), Federation of Malaya (p. 81), Iraq (p. 87), colonial Africa (pp. 91-97). All of the summaries mentioned above are still substantially up to date.
Covered in this appendix, in alphabetical order, are the following:
BELGIUM-LUXEMBOURG
License Requirements
The basic legislation from which the present import-export control system in Belgium has developed was a law of June 30, 1931, modified by the law of July 30, 1934, which authorized in broad general terms the regulation of Belgium’s foreign commerce to promote the general economic well-being of the country. The convention with the Grand Duchy of Luxembourg on the 23d of May 1935, amending the economic union convention of 1922, established also a combined Belgo-Luxembourg Administrative Commission (the Commission Administrative Mixte Belgo-Luxembourgeoise) and in this way provided a central agency for coordinating the import and export licensing procedures of Belgium and Luxembourg. Pursuant to the 1935 convention, when the appropriate agency of either Government desires to modify or expand regulations pertaining to import and export controls, the recommendation is discussed with the appropriate agencies of the other Government; their agreement having been reached the new policies are communicated to the Mixed Commission which then transmits identical instructions to the Belgian Central Office of Licenses and Quotas and the Luxembourg Office of Licenses. This procedure insures close coordination of the import and export licensing operations of the two Governments in order that the general economic welfare of both may best be served.
The control over exports effected by the requirement of export licenses is reinforced by special controls applied at the time of the actual export of the licensed merchandise. Submission to these special controls is required as a previous condition to the obtaining of certain licenses, these special additional controls being applied by reason of the special nature of the merchandise to be exported or to assure the direct delivery of the merchandise to its foreign destination.
Applicants for export licenses must make a declaration that they are familiar with the conditions upon which licenses are issued and the regulations relative to exchange controls, and that they accept these conditions and regulations without reserve. The applicant also acknowledges that the licenses are not transferable and that any irregularity in his application or utilization of the license subjects him to possible refusals of any new export license applications and may expose him to prosecution for a criminal offense. Exporters of products whose final destination is controlled must sign an undertaking that their exports are not to be reexported. In such cases, the exporter renounces his right to obtain any subsequent export licenses in all cases for which nonreexport declarations are required, if the present undertaking is evaded.
At the present time, licenses are not required for goods passing in transit through Belgium, with the exception of arms and implements of war and atomic energy items, as well as petroleum and its subproducts.
Financial Controls
Prior authorization is required for all buying and selling transactions abroad by Belgian and Luxembourg residents. The exchange control is carried out by the Belgo-Luxembourg Exchange Institute.
Shipping Controls
Belgium has taken action to prevent the carrying of strategic goods in Belgian ships to Communist Chinese and North Korean destinations.
CANADA
Permit Requirements
The Canadian approach to export control is in two parts: by strategic and short supply commodities, and by areas. Under the commodity control two schedules of goods have been established: (1) goods in short supply for which permits are required for shipment to all destinations; and (2) goods of strategic importance for which permits are required for shipments to all countries other than the United States. The area control sets up a list of countries (roughly all of Europe and the Far East) to which all shipments normally require a permit. A general export permit is in effect which enables the shipment of specified nonstrategic items to all destinations except to Communist countries without individual permit.
Export controls are administered by the Export Permit Section of the Canadian Department of Trade and Commerce under authority of The Export and Import Permits Act.
Transit Controls
An export permit is required for all goods originating outside Canada when tendered for export in the same condition as when imported, without further processing or manufacture in Canada. Goods in transit in bond on a through journey on a billing originating outside of Canada, clearly indicating the ultimate destination of the goods to be a third country, do not require a Canadian export permit. Foreign goods passing through Canada to a third country without a through bill of lading require a Canadian export permit. (If such goods represent United States shipments of controlled goods passing through Canada to third countries they must be covered by a United States export permit.) All Canadian goods having an undeclared ultimate destination require export permits. Effective from July 4, 1952, shipments of United States goods through Canada must be accompanied by a copy of the United States export declaration form.
Financial Controls
Canada does not exercise financial controls over the movement of any commodity.
DENMARK
License Requirements
Export licenses are required for all commodities, except certain agricultural products, if the goods are exported to or intended for end use in countries which are not members of the European Payments Union or are within the dollar area.
For the goods enumerated in the below-mentioned Commodity Lists A and B, export licenses are required, irrespective of the country of destination.
List A of the Danish export regulations consists of items of strategic significance. For most of these items the licensing authority is the Board of Supply, but the Ministry of Justice controls exports of arms, munitions, and military equipment, and machinery for the production thereof. For the exportation of ships, the Board of Supply must obtain prior approval from the Ministry of Commerce, Industry, and Navigation.
List B consists of nonstrategic goods. Export licenses for these are issued by the Board of Supply, the Board of Health, the Ministry of Public Works or the National Bank of Denmark according to the nature of the commodity concerned.
Denmark has instituted import certificate-delivery verification procedures.
Exchange Controls
The National Bank of Denmark exercises strict controls over all transactions in foreign exchange. Earnings in foreign currencies must be repatriated and sold to the bank unless special exceptions are made.
Transit Controls
The export controls apply to merchandise exported from the Copenhagen free port, including exports from transit or bonded warehouses and goods from free port or private warehouses. They also apply to goods in transit through Denmark, unless these are transiting on a through bill of lading and there is no change in the ultimate destination. They thus effectively prevent unauthorized diversion of goods in transit through Denmark.
All transit transactions financed by Denmark are subject to control by the national bank, regardless of whether the goods in question actually pass through Denmark or are forwarded directly between the countries of origin and destination. In its administration of these provisions the bank observes the same rules as the export control authorities with which the bank cooperates closely in this field.
Shipping Controls
An arrangement has been made by the Danish Government with Danish shipping companies to prevent the carrying in Danish vessels of strategic goods to Communist China and North Korea. This arrangement is implemented through a licensing system operated under a voluntary agreement with Danish shipowners.
EGYPT
License Requirements
Foreign trade and foreign exchange in Egypt are under official control. These controls were primarily designed to conserve foreign exchange but since the spring of 1951 they have been expanded to prevent the export of short supply items.
Except for books, magazines and newspapers, import licenses are required for all imports. Prior to October 6, 1952, licenses were required for goods originating in hard-currency countries, while imports from other sources were in the most part exempt from restrictions.
Application for imports are submitted to the Controller General of Imports, Ministry of Finance. Exports are subject to export regulations which are divided into three main categories: (a) goods that may not be exported; (b) goods that can be exported freely, through the Customs, without the need of an export license, and (c) goods that should be covered by a license. The Import and Export Committee is the main authority entrusted with the formulation of decisions governing exports and imports. This Committee is under the Secretaries for Finance, Commerce and Industry, Supplies, Agriculture, War, the Director General of Exchange Control, the Director General of Cotton Affairs of the Ministry of Finance, the Controllers General of Exports and Imports, and the Director General of Customs.
Transit Controls
There are no special licensing requirements or controls on goods in transit other than the ordinary customs supervision.
Financial Controls
Foreign exchange is under official control. The basic regulation requires all foreign exchange earnings to be repatriated to Egypt within 6 months after the shipping date of the goods. The law requires that all dollar holdings or payments received by Egyptian nationals or foreigners residing in Egypt be reported to the Egyptian Government and converted into Egyptian currency at the official rate unless they are the proceeds of cotton yarn and cloth or raw cotton exports in which cases 100 percent or 75 percent, respectively, of the dollars may be retained for up to 210 days in an “import entitlement” account usable to buy certain listed essential and semiessential commodities.
FRANCE
License Requirements
Export licenses are required for over one-half the commodities identified in the French tariff nomenclature. Governmental authority of this control is contained in various decrees, the latest dated November 30, 1944. These decrees also permit addition to or removal from the list of controlled commodities merely by publication of a notice in the Journal Officiel. The most recent list of these commodities, published as a codification of all previous lists, appeared in Journal Officiel No. 156 of July 5, 1953.
Applications for license to export, as submitted by French exporters, are examined by the Ministry of Industry and Energy, by the Office des Changes (where monetary and financial factors are given consideration), and on occasion by appropriate technical committees and personnel in other agencies. At the time the application for export license is submitted, the exporter may be instructed by the Ministry of Industry and Energy to submit a sample, photograph, blueprint, drawing, or other detailed description of the commodity in question. These data are used in determining the advisability of issuing the export license requested. At the port of exit, random samples of actual exports are extracted by customs officials and these are compared by competent technicians with the original data submitted with the license application. This procedure is designed to assure in as many instances as practical that the commodity exported is identical with the commodity for which the export license is issued.
In the event fraudulent action on the part of the exporter is found and can be legally established, the exporter is subject to confiscation of the goods in question and fines ranging upward to four times the value of the shipment plus penal servitude. The control system in operation in France makes it possible to block or encourage exports to any destination of commodities requiring export licenses.
Financial Controls
All transactions in foreign exchange engaged in by French residents, particularly those in which a French resident takes title to foreign merchandise, require the prior authorization of the French Government.
An “exchange commitment” (guaranteeing the return to the Government of the exchange proceeds of a transaction) is required for all exports and reexports of merchandise to which a French resident holds title. Where the products concerned are subject to export license, the export license suffices for the exchange commitment.
Shipping Controls
In order to avoid the transport on French vessels of strategic commodities to Communist China, the French Government has reached agreement with the only French shipping firm operating on the China run that the latter will not transport commodities of any description to Communist China unless these are covered by export license or permit indicating Communist China as the destination and issued by the French Government or a friendly foreign government maintaining the same level of controls as concerns strategic items to China as is maintained in France.
The French Government has also instituted controls to deny bunkering facilities to vessels transporting strategic commodities to Communist China.
GERMANY (FEDERAL REPUBLIC) AND WESTERN BERLIN
License Requirements
No commodity can be exported from the Federal Republic of Germany or Western Berlin unless it is covered by an export-control document, which is issued by the interior customs authorities. However, certain types of exports require a special export-control document which is granted by the interior customs authorities only after a certificate of approval has been obtained, as appropriate from the Central Export Control Office of the Federal Government or the Central Licensing Agency of the Berlin Senate. A certificate of approval is required for all exports (regardless of commodity) to the Soviet bloc, Hong Kong or Macao, and for the export of all commodities in excess of DM 500 on the “restricted list,” published by the Federal Government, to all other countries. This list, which corresponds to the United States “positive list,” comprises commodities under control for security and short-supply reasons and includes all items covered by title I and title II of the Battle Act.
Exports to numerous western countries, including peripheral countries, are subject to one form or another of end-use checks. The import certificate-delivery verification procedures have been in operation since July 1951.
In conjunction with the issuance of either the export-control document or the special export-control document, the interior customs authorities observe a definite procedure for physical inspection of commodities being exported. Additional control over commodities being exported from the Federal Republic is exercised by the border customs authorities.
Transit Controls
Certain items are prohibited for intransit shipments on grounds of health and sanitation, but the number of items so prohibited is very small and the prohibited list has not been changed since 1939. German customs officials may inspect transit shipments at the border and remove any items prohibited under German law. They then seal the containers of all other goods and such goods are permitted to proceed, in accordance with international agreement on transit traffic, without further inspection or restriction, except to insure at the exit border that the original customs seals remained unbroken.
Intransit shipments arriving in the Freeport of Hamburg are subject to a customs documentary and physical check before being allowed to enter the Freeport. When in the Freeport, such shipments are under the control of the Freeport authorities, and may be loaded, unloaded, or reloaded only with their approval. The destination of intransit shipments arriving in the Freeport of Hamburg traveling under a “through bill of lading” can only be changed upon instructions of the original shipper, while the destination of intransit goods traveling under an “ordinary bill of lading” can be determined by the responsible local forwarding agent.
Intransit shipments consigned to West German firms and remaining in the Freeport of Hamburg for shipment to a consignee outside Western Germany, require an intransit trade permit (Transit Handelsgenehmigung), except when the goods are returned to country of origin. Such intransit trade permits are issued by the State Central Banks after careful scrutiny of the West German firm and in accordance with the same regulations applying to shipments of West German origin, and approval by the West German Central Export Control Office. West German firms must be listed in the official trade register in order to qualify for an intransit trade permit.
The identical procedure is enforced in the Freeports of Bremen and Bremerhaven, with the exception that the functions within the Freeport are carried out by Federal Customs Authorities rather than Freeport Authorities. This procedure also applies to Cuxhaven, Emden, and Kiel, which are Freeports of very minor importance.
Financial Control
All financial transactions between residents of Western Germany and Western Berlin and residents of other areas are subject to either general or specific exchange-control authorizations issued by the foreign-trade banks. Before those permits are granted, the transactions in question are not only screened with respect to currency problems but also in regard to the strategic nature of the goods. The latter screening is done by export control officials, who have the power to prevent the transaction.
GREECE
License Requirements
Export licenses are required for all strategic commodities, all minerals, and for certain nonstrategic commodities for which export quotas have been established. For nonstrategic shipments, licenses are issued by the Bank of Greece in accordance with directives from the Greek Foreign Trade Administration, Ministry of Commerce. For strategic shipments, including those to the Soviet bloc countries, licenses must be obtained from the FTA. Such FTA licenses are limited to items and quantities contemplated by trade agreements or approved private barter arrangements.
Transit Shipments
A transit shipment whose final destination is not indicated on the manifest or shipping documents must be licensed by the FTA prior to being reexported. If the destination be indicated, no export license is required.
Financial Controls
Foreign exchange proceeds must be surrendered to the Bank of Greece.
Shipping Controls
Effective March 17, 1953, the Greek Government prohibited Greek flag vessels from calling at Communist ports in China and North Korea. This was accomplished by the Greek Council of Ministers Act No. 204 of March 17, which was enacted into law by the Greek Parliament on May 7. Violators are punishable under the provisions of law No. 2317 of 1953, published in Greek Government Gazette No. 61, dated March 17.
The Greek foreign investment law provides that foreign vessels transferred to the Greek flag may only be resold to countries named in the “letter of approval”. This listing has not included Soviet bloc countries. With only minor exceptions, ships already under the Greek flag may not be resold to other countries.
Current bunkering controls require licensing both by the Bank of Greece and the customs authorities. Ship repair controls require licensing by the customs authorities. In neither case is the licensing control based on the nationality of the vessel to be serviced nor, in the latter case, the type of materials used for repair or installed.
HONG KONG
While there has been no appreciable change in the already extensive security controls maintained by the Hong Kong Government on exports to Communist China and the Soviet bloc, there were changes in the laws and legal processes under which these controls are enforced. The Emergency (Importation and Exportation Ordinance) (amendment) Regulations, 1953, were promulgated July 10, 1953, in order to prevent evasions of export and import controls. Eighteen modifications were made by these Emergency Regulations. Among them were:
1. It was made an offence to transfer an export permit with intent to deceive or to allow any other person to use a permit with intent to deceive.
2. As court decisions in smuggling cases had thrown doubt on the legality of searches and seizures carried out by the Royal Navy in enforcing export regulations, an amendment in these Regulations specifically authorizes “any commissioned officer of H. M. Armed Forces” to carry out such duties.
3. “Any vessel not exceeding 250 gross tons and any vehicle which is made use of in the importation and exportation or attempted importation or exportation of any article contrary to the provisions of this Ordinance or any regulation made thereunder shall be liable to forfeiture whether or not any person is convicted of any offence.” This article was added to discourage truck owners and particularly, junk masters, from agreeing to the use of their property for carriage of smuggled goods, even though the main purpose of their trip is quite legal. Thus, whether a conviction is obtained or not, the truck or junk is liable to forfeiture.
Several other changes have also been made which were designed to protect the rights of persons tried under the basic Ordinance by bringing the Ordinance into line with usual British judicial practice.
During the past 6 months Hong Kong has added a number of items to its prohibited export list and struck off a number. All of these actions were taken in conformity with the decisions of the United Kingdom Board of Trade.
There were no changes in the transit controls or shipping controls in Hong Kong in the last 6 months of 1953.
In the field of financial controls, since October 1953, approved gold and bullion dealers have been permitted to import nonresident-owned gold solely for reexport. While in Hong Kong such gold must be in the custody of an authorized bank. Such reexport is allowed only to nonsterling area countries and on production of a valid import license from the country of destination.
IRAN
The right to conduct foreign trade is vested in the Iranian Government by the foreign trade monopoly law of 1931. From time to time the Government grants by decree the right to conduct trade with respect to certain commodities to private individuals and firms.
License Requirements
Exports are controlled primarily through the exercise of financial controls. In general, laws and regulations governing export trade are designed so that commodities that are in short supply, or which would otherwise have to be replaced by imports, may not be exported. Thus there is a standing prohibition against the export of gold and silver in bars, sheets, or coins; cattle, sheep, raw hides, charcoal, matches, butter, sugar, and tea. Also prohibited are exports of arms and ammunition, precious stones other than turquoise and pearls, and archeological articles. Only on rare occasions has the Government authorized the export of any or these commodities.
Decrees currently in effect permit the export of all other commodities without licensing procedure except those under Government monopoly, such as opium, oil and tobacco, and except wheat, flour, barley, legumes, rice, lumber and cotton. Depending on the availability of these last-named commodities, export quotas are established for them each year, and export licenses are issued by the Ministry of National Economy to private individuals or firms to the extent of the quotas established for each commodity.
The issuance of export licenses for lumber and cotton is subject to the approval of the Ministry of Agriculture and the Iran Cotton Co. (an agency of the Plan Organization), respectively. The export of opium and tobacco, which are under Government monopoly, is subject to license of the Ministry of Finance.
Some Iranian exports are effected under barter or clearing agreements which Iran has concluded with a number of countries since 1940, including the U.S.S.R., the Federal German Republic, France, Italy, Czechoslovakia and Poland. Since quota lists under these agreements specify the commodities involved, exports made thereunder are in effect licensed by the agreements themselves.
Regulations promulgated on March 18, 1953, under the Law on the Encouragement of Exports and the Issuance of Licenses to Engage in Foreign Trade of December 22, 1952, require Iranian exporters to submit a preexport declaration, in which they inform the Ministry of National Economy of their intention to export stated commodities to stated destinations. One copy of this declaration is certified by the Ministry and must be returned to the exporter within 48 hours. A second copy goes to the Customs Administration for use in inspecting the goods when they actually leave the country.
Transit Controls
Goods having in transit through Iran may enter and leave the country only at places where customs houses have been established for that purpose. Detailed documentation is required by Iranian customs authorities for goods in transit. In practice, there are very few intransit shipments through Iran.
The reexport of specified goods of foreign origin is permitted under a decree of November 11, 1953, which lists five categories of goods eligible for reexport. Reexport of such goods, however, requires the prior approval of a commission established in the Ministry of National Economy, with representatives from a number of other Government departments. Prior to this decree, reexport, of imported goods was permissible only by decree of the Council of Ministers, which rarely considered reexport cases. The new procedure represents a more workable machinery for the licensing of reexports. It should at the same time provide adequate safeguards against the reexport of strategic items.
Financial Controls
Exporters of Iranian goods must sign an undertaking that the exchange derived from the export will be sold to a bank authorized by the Government to deal in foreign exchange.
ISRAEL
License Requirements
All goods to be exported from Israel (including reexports), with certain minor exceptions such as gift parcels and commercial samples under I£10,000 in value and personal effects of tourists and immigrants, require an export license. The Ministry of Commerce and Industry is responsible for the control of most products. Outstanding exceptions, with the Government department or agency responsible, are as follows:
- Military items—Ministry of Defense.
- Fuel—Ministry of Finance.
- Citrus—Citrus Marketing Board.
The Ministry of Commerce and Industry may ask for recommendations from other ministries before licensing certain products, for example foods and pharmaceuticals.
Israel voted to support the United Nations Resolution of May 18, 1951, placing an embargo on shipments of arms and related material to China and North Korea.
Transit Controls
The value of intransit trade is small, inasmuch as Israel is bounded on three sides by Arab states with which no legal trade is conducted, but commodities may be entered in bond without becoming subject to export licensing controls. Before reshipment may take place, however, a permit must be obtained from the Office of the Collector of Customs.
Financial Controls
The Israel Government exercises far-reaching control over the use of foreign exchange, and it regularly uses this control to restrict the movement of commodities in international trade. Israeli importers are required to submit comprehensive justifications as to Israel’s need for a commodity before they are granted an allocation of foreign exchange. Once the licenses have been granted, it has been to the interest of the Government of Israel to make certain that the commodities are in fact imported and used in the Israeli economy. This identity of interest is a strong safeguard that materials consigned to Israel are not reexported.
ITALY
License Requirements
All commodities listed in the new export tables dated March 16, 1953, as amended, require an export license to all destinations except Somaliland, which is issued by the Ministry of Foreign Trade. Goods not listed in the export tables are exempt from license, but must be exported in conformity with exchange regulations, which vary according to the country of destination and clearing or other financial agreements.
All items require an export license for shipment to the Soviet bloc, including China.
Exports to the Soviet bloc also require bank validations, as virtually all trade with the bloc is conducted under bilateral agreements which specify the commodities that may be traded and the methods by which payment is to be made. Normally, shipments to the East comprise only those commodities specified in a trade agreement with an eastern country. In order to facilitate checking of east-bound shipments, trade with the Soviet bloc is funneled through selected frontier customs points.
The formulation of export-control policy and the administration of the export licensing system are the primary responsibility of the Ministry of Foreign Trade. This Ministry is advised by a special interministerial committee.
Italy is employing import-certificate delivery-verification procedures and carries out end-use checks for shipments to destinations outside the Soviet bloc, particularly for questionable transactions involving goods of a strategic nature. The country of origin is notified if an attempt is made to divert a shipment.
Financial Controls
Financial control over all export transactions is maintained through the licensing system and through implementation of existing exchange-control regulations.
Strict bilateral trade agreements with almost all members of the Soviet bloc have constituted, in effect, a financial ceiling on exports to Eastern Europe. Italian exports to Communist China, with whom there is no trade agreement, must be paid for in hard currency or must be exchanged for goods acceptable to the Italian Government, an arrangement that has severely restricted Italo-Chinese trade. Italian exchange control regulations would not normally permit payment for imports from the Soviet bloc in hard currencies, although sterling is occasionally used in payment for the few items not included in the trade agreements. In certain instances ship charters are completed for sterling when circumstances warrant or it is considered convenient.
Transit Controls
Direct and indirect transit shipments are subject to customs check, which includes a screening of documents, physical inspection of goods in case of doubt and control of the routing of shipments to prevent the use of unnatural and unusual methods of transportation. In the case of indirect transit shipments, a check is also made on the regularity of the transaction from the foreign-currency standpoint. In doubtful or suspect cases, customs, while not empowered to stop transit shipments, is able to delay the transaction until the Ministry of Finance, in conjunction with the Ministry of Foreign Affairs and other agencies, obtains detailed information concerning the final destination. When an investigation discloses that a transaction is not in order, the central administration orders confiscation of the goods and prefers charges against those responsible, if they are Italian nationals.
New regulations published in April 1953, imposed a more strict financial control over indirect transit operations. Prior to this time, certain firms and individuals who were officially authorized to hold foreign currency accounts, were permitted to carry on transit operations without making an application for foreign exchange in each case. The new regulations withdrew this privilege, making it necessary for all transit operators to submit an application to the General Directorate for Currencies of the Ministry of Foreign Trade before purchasing abroad any item listed in part A of the export tables (which include strategic items). A later amendment to this regulation permits a certain flexibility by allowing the transit operator to purchase goods abroad and have them shipped to Italy before making application to the Ministry of Foreign Trade. An operator making use of this provision must submit to the bank which holds his currency account a written commitment that the goods will be sent directly to Italy and not diverted and must obtain the clearance of the General Directorate for Currencies before the goods can be onforwarded through Italy to another country.
Shipping Controls
The Ministry of Merchant Marine has drafted a bill which, when enacted into law, will give the Italian Government the power to exercise control over shipping traffic with countries of the Soviet bloc. The bill contemplates quite severe penalties to be imposed upon owners and masters of ships failing to comply with regulations established by the Ministry of Merchant Marine. Consideration of this bill by Parliament has been delayed for nearly 1 year, however, and there seems to be no immediate prospect that it will be enacted into law.
Penalties
Penalties that may be imposed under Italian law for violations of export-control regulations include (1) imprisonment up to 2 months, (2) fines up to 40,000 lire, and (3) confiscation of the merchandise involved. Persons and firms under investigation for illegal export transactions are denied foreign trading privileges. However, an amnesty law recently passed by the Italian Parliament has resulted in the dropping of all charges outstanding against violators of the export control regulations.
Irregularities under the customs law may be punished by fines from 2,000 to 20,000 lire, while other infractions may incur the penalties contemplated by the penal code.
Licenses from the Japanese Ministry of International Trade and Industry are required for exports of any commodity on the Japanese export control list. No exports to North Korea have been permitted since the outbreak of the Korean War. Exports to Communist China are limited to nonstrategic items. Exports of strategic items to any other communist bloc country are strictly controlled.
Strategic items embargoed by Hong Kong to Communist China are licensed for export to Hong Kong by Japan only if an essential supply certificate has been issued by the Hong Kong Government, and on exports of lesser strategic items the Japanese licensing authorities require end-use checks or reliable evidence that reexport to Communist China is unlikely.
End-use checks are made also on suspicious exports of strategic items to other destinations and the import certificate-delivery verification procedure has been utilized since April 1, 1953.
Transit Controls
Intransit cargo is offloaded under customs supervision and is normally kept in a bonded warehouse or other area under the complete control of customs officials.
All offloaded intransit cargo is subject to the same export regulations as indigenous exports.
Financial Controls
For balance-of-payments reasons, Japan closely controls its receipts and expenditures of foreign exchange. These controls are not related to security measures except indirectly in connection with trade with Communist China and the Soviet Union.
Trade with these areas is largely confined to barter transactions which must be settled on the basis of back-to-back or escrow letters of credit approved by foreign exchange banks.
Shipping and Bunkering Controls
Since June 1951 it has been required that bills of lading issued by carriers for strategic items licensed for export must contain a “Notice to carrier” stating that delivery of the goods to countries other than the destination designated in the export license is prohibited without the express permission of the licensing authority.
Japanese shipowners have been notified that Japanese vessels are not authorized to carry strategic goods to Communist China from Japan or from any other country unless shipment has been licensed by a COCOM country.
Administrative measures also have been adopted to prevent foreigners from chartering or using Japanese vessels to carry contraband goods to Communist China or North Korea. The Ministry of Transportation has announced that applications for approval of a bare boat or time charter of a Japanese vessel to a foreigner must show that the charterer has guaranteed that during the period of the charter the vessel will not enter any port in Communist China or North Korea with strategic goods on board the vessel unless the shipment has been licensed by a COCOM country.
The Ministry of International Trade and Industry furthermore has instructed Japanese oil companies not to furnish fuel bunkers to any vessels carrying strategic goods to Communist China or North Korea unless the shipment has been licensed by a COCOM country.
REPUBLIC OF KOREA
License Requirements
Foreign trade in the Republic of Korea is governed by regulations issued by the Ministry of Commerce and Industry. Licenses are required for all exports to all destinations and are issued by the Ministry of Commerce and Industry only to registered foreign traders, or to manufacturers for their own products. A certificate of final destination (or pledge to submit such a certificate) must accompany all exports license applications.
Registration as a foreign trader is canceled when a trader does business with individuals or juridical persons under a Communist government. Delivery of arms, ammunition and other goods for military use to enemy countries is a criminal offense.
Financial Controls
Foreign exchange proceeds from exports are subject to the control of the Bank of Korea.
Shipping Controls
Vessels engaged in foreign trade are required to submit their manifests upon entry into an open port and are prohibited from proceeding to a foreign country except by way of an open port. Transshipment from one vessel engaged in foreign trade to another is prohibited unless authorized by the Collector of Customs. Vessels engaged in domestic trade cannot load export goods unless the goods are shipped in bond.
THE NETHERLANDS
License Requirements
All exports from the Netherlands are subject to export licenses. Export licenses for industrial commodities are issued by the Central Bureau of Imports and Exports (CDIU) at The Hague, which has delegated this authority to a number of so-called trade-control boards. For agricultural products, licenses are granted by the Ministry for Agriculture, which for a large number of commodities has delegated this function to the “agricultural-monopoly holders.” The latter are state-supervised and semiofficial organizations, similar to the trade-control boards.
In certain instances, the exporter may make out his own export license which must be dated and initialed by an officer of the CDIU.
Transit Controls
Goods passing in transit through the Netherlands, including strategic commodities, are not subject to any controls except for a customs check to insure that goods in transit leave in the same form in which they have entered.
The Netherlands has adopted import certificate-delivery verification procedures.
Financial Controls
All transactions of a Netherlands resident involving payment of moneys to or from a party abroad are subject to a foreign-exchange license, issued by the Netherlands Bank. The export license generally includes the authorization of the banks for the proposed transaction.
Shipping Controls
The Netherlands instituted voyage controls in May 1953, aimed at preventing the carriage of strategic commodities by Netherlands ships to Communist China and North Korea except pursuant to special permission.
NORWAY
License Requirements
All commodities to be exported to any destination require export licenses. The licensing authorities using existing powers can prevent the export of any item for security reasons.
Transit Controls
Goods which are to pass through the territory of Norway may be reexported without license only if it is clearly stated by their conveying documents that the goods are going straight to foreign destination. If the reexport does not take place within 90 days, a Norwegian export license must be secured. The destination listed on the original documents must remain the same, and the goods may not be transformed in any way during their stay in the country. The customs authority applies a control to that effect. There are no free-port areas in Norway.
Norway has adopted import certificate-delivery verification procedures.
Financial Controls
Strict exchange controls are maintained by the Government through the Bank of Norway. The granting of an export license carries with it the obligation on the part of the exporter to relinquish the foreign exchange to the Bank of Norway as soon as received from the foreign buyer; a maximum of 60 days is allowed between export and remittance, although under certain circumstances the Government may grant the exporter an extension of time. Transfers of capital from Norway require the prior approval of the Bank of Norway.
Shipping Controls
The Norwegian Foreign Office announced publicly in April 1953 that the Norwegian war risk insurance group had refused to insure Norwegian vessels delivering strategic articles to Communist Chinese and North Korean ports. The foreign office also announced that Norwegian ships had not violated the United Nations resolution prohibiting the shipment of strategic material to Communist China and North Korea. Several allegations that they had done so had been investigated and found to be unjustified.
PAKISTAN
License Requirements
Pakistan’s export controls are exercised under the authority of the Imports and Exports (Control) Act, 1950 (Act No. XXXIX) as amended by the Imports and Exports (Control) Amendment Act, 1953 (Act No. IX of 1953), which extends the life of the 1950 act for 3 years, until April 18, 1956. The act empowers the Central Government to prohibit, restrict, or otherwise control the import or export of goods of any specified description, or regulate generally all practices and procedures connected with the import or export of such goods. Under an export trade control notification of 1948, which is still in effect, numerous categories embracing strategic or short-supply materials have been established for which no licenses are granted. Pakistan prohibits the reexport in their original form of all imported materials regardless of origin except in specific cases, each of which is examined on its own merits. With respect to goods of domestic origin, Pakistan encourages exports to all countries of such goods as are surplus to her own requirements and encourages shipments to the dollar area by placing selected items on an open general license specifically applicable to the dollar area.
Transit Controls
Pakistan has issued special transit regulations to govern trade passing through that country to Afghanistan. Strict control is maintained, moreover, at the ports to insure against unauthorized transit shipments.
Financial Controls
Pakistan has promulgated exchange control regulations which insure the surrender to the State Bank of Pakistan or its authorized agents of all foreign exchange derived from export transactions.
Shipping Controls
The Control of Shipping Act, 1947 (Act XXIV), approved by the Central Government as amended by Ordinance V of June 22, 1951, provides for the control of shipping. Under this act a shipping authority appointed by the Central Government licenses vessels of both Pakistan and foreign registry which participate in coastal traffic. This act was recently extended through March 31, 1959.
PORTUGAL
License Requirements
All exports are subject to licensing under regulations issued in 1948 except that export licenses are not generally required for shipments to Portuguese overseas provinces. Portugal’s export trade with the Soviet bloc is not important and consists almost entirely of cork, which is not on any strategic or restricted list. The Portuguese colonies exert varying degrees of export control. On January 23, 1952, the Government of Macao adopted a trade-control system which requires a license for the import and the export of strategic materials. Strategic materials are shipped from Portugal to Macao only against import certificates issued by that province.
Transit Controls
Portuguese controls over goods in transit are not wholly effective in that no export license is required if goods in transshipment are reexported within 60 days after being placed in bond.
Financial control is exercised over all exports as a part of the license control system.
SINGAPORE
Licensing Requirements
Colonial legislative authority for control of imports and exports is exercised under the Control of Imports and Exports Ordinance of 1950, which places the issuance of all licensing, both general and special, under the absolute discretion of the Controller of Imports and Exports. Under this general authority, all exports are carefully controlled. Strategic commodities, in particular, are controlled in accordance with UK-adopted strategic trade controls with respect to exports to all Soviet bloc destinations. In addition, a special list of goods is embargoed to Communist China and North Korea, and subject to Essential Supply Certification if such goods are to be exported from Singapore to Hong Kong. Amendments to the latter embargo list adopted by the United Kingdom are promptly reflected in Singapore.
Many commodities are subject to special licensing controls under exchange restrictions or emergency regulations. The only exemptions to licensing are goods transitting the colony on a through bill of lading, and those shipments customarily exempted in international trade, such as parcel post shipments under $50, etc.
Transit Controls
Goods which transit the port of Singapore without offloading are subject to no control. Goods which are landed in the colony for the purpose of transshipment on a through bill of lading to another destination are also subject to no local license or declaration, as long as such goods remain in the custody of the harbor board or of the agent of the ship from which landed. Transshipment goods not on through bills are treated as reexports, and are subject to full export control.
Shipping Controls
The United Kingdom Control of Trade by Sea Order (China and North Korea) 1953, went into effect in Singapore on March 31, 1953. Since that time, measures taken to implement the order effectively have included placing all bunkering of ships, either coal or oil, of over 500 gross registered tons, on a local licensing basis. This places bunkering under the control of the Controller of Exports and Imports. Voyage licensing of vessel is under the control of the Master Attendant.
TURKEY
Export Controls
Under the new foreign trade regime, Turkish exports are grouped in two lists. List I contains all Turkish export commodities, the export of which is unrestricted unless they also appear on list II. A simple customs exit declaration based on the exporter’s application is all which is necessary to realize list I exports. List II designates commodities requiring export licenses. The export license can be obtained from the Ministry of Economy and Commerce or agencies so designated by the said Ministry. List II items may also be exported by certain Government or semigovernmental agencies only. The list II commodities subject to such licensing procedure are as follows: cereals (barley, wheat, rye, corn, oats, and rice) and cereal products (semolina, macaroni, starch, noodles, flour); animal products (butter); dried fruits and nuts (pistachios shelled or unshelled, seedless dried raisins); minerals and mineral products (asbestos, copper, copper waste and scrap, copper plates, bars and wires); copper alloys and copper alloy products; barite; steel and iron waste and scrap; zinc ore; zinc mixed with lead; iron ore and pyrites; pig iron; iron products and waste and scrap; ferro-manganese; graphite; calco-pyrite; chrome ore; lead ore; sulphur ore; stone coal; mineral waste; coke and coke dust; manganese ore; molybdenum; tin waste; raw materials for textiles (cotton linters, greasy wool); vegetable oils (olive oil, margarines); tobacco and opium (tobacco processed and leaf, opium); creosote and xylol; sodium fluoro-silicate; toluol; mineral oils mixed with phenol and naphtha; straw; pistols and ammunition.
Transit Controls
There is no large amount of intransit trade in Turkey. All intransit goods arriving in Turkey, however, must carry on all shipping documents (including bill of lading and ship manifest) and outer containers the name of the Turkish port, the phrase “in transit to” and the name of the city and country of destination.
Generally, goods moving intransit through Turkey may be imported only through customs warehouses.
Extensive documentation, including a reexport license, is required for clearance by the Turkish Customs Administration.
Financial Controls
Export-control measures are designed for two purposes: (1) to keep a check on outgoing strategic or short-supply materials, and (2) they are instituted also for foreign-exchange reasons. For price-checking purposes in order that foreign-exchange losses can be prevented, exporters must register with agencies designated by the Ministry of Finance. Customs authorities do not permit exportation without a certificate of registration and destination. All foreign currency receipts are turned over to the Central Bank of Turkey.
UNITED KINGDOM
License Requirements
The export control system in the United Kingdom is similar to but not identical with that of the United States. It is administered by the Board of Trade. Although the present system grew out of measures originally promulgated at the start of World War II, its primary purpose now is the safeguarding of the country’s requirements of strategic and short-supply goods, and the restriction of the flow of such items to undesirable destinations. The United Kingdom security trade control program was instituted in 1947.
The United Kingdom export control mechanism operates in the following manner:
The consolidated order, which encompasses all the items subject to control, is a published document and revisions are issued in the form of statutory orders which are also published in the Board of Trade Journal (an official weekly). The list is arranged into three schedules. The first schedule lists goods which, in general, cannot be exported to any destination without a license. The second schedule lists additional goods (mostly foodstuffs) which, in general, can be exported to any destination without a license. The two schedules are, however, subject to two qualifications. Firstly, a limited number of goods included in the first schedule can be exported without license to destinations within the British Commonwealth (except Hong Kong), Ireland, and the United States. Such goods are listed in the third schedule. Secondly, no goods, even those included on the second schedule, can be exported without license to China, Hong Kong, Macao, or Tibet.
The extent of the restriction on individual items is reflected in the administration of the control. Strict control is maintained over items which are prohibited exportation to certain areas, as, for instance, aircraft, firearms, ammunition, atomic materials. The exportation of a wide range of goods of strategic importance, including rubber, to Communist China is prohibited, as is the exportation to the Soviet bloc in Europe of a somewhat narrower range of commodities. The export to the Soviet bloc of many other items is subject to limitations as to quantities permitted to be shipped. In addition, there is the great bulk of items on which control is achieved through case-by-case scrutiny of individual license applications.
Transit Controls
The United Kingdom has had in effect since November 1951 a system whereby about 250 items of strategic importance arriving from other countries are subject to transshipment control. Individual licenses are required for all of the items on the licensing list before any of the goods, after being landed in the United Kingdom, can be transshipped to any destination other than the British Commonwealth (except Hong Kong), Ireland, and the United States. In administering the control, the British authorities normally grant licenses when they are satisfied that the goods will not be diverted to the Soviet bloc, China, etc., contrary to the wishes of the exporting country.
The United Kingdom has effectively implemented import certificate-delivery verification procedures.
Shipping Controls
In order to restrict further the flow of strategic goods to China and as an additional measure of control, a statutory order (titled the Control of Trade by Sea (China and North Korea) Order, 1953) was made on March 13, 1953, pursuant to which the Ministry of Transport and Civil Aviation is empowered to control all shipping to China and North Korea. In essence, the order applies to all British ships having a gross tonnage of 500 tons, limits the type of trade in which the ships may engage and the voyages which may be undertaken, affects the class of cargo or passengers which may be carried, and imposes certain conditions on the hiring of ships. Approximately a hundred items are listed in a schedule which is an integral part of the license issued under the order in question. These items are banned from carriage to China in British flag vessels.
While formal shipping controls were not adopted until March 17, 1953, British shipping circles were kept under fairly close scrutiny by the Government ever since the adoption on May 18, 1951, by the Additional Measures Committee of the United Nations of the resolution to apply economic sanctions against China as a result of her aggressive intervention in Korea.
Complementary controls over the bunkering of vessels carrying strategic cargo (as defined in the Shipping Control Order) to China were adopted at the same time that the order affecting shipping became operative. These controls are administered by the Ministry of Fuel and Power on an informal basis, in cooperation with British oil companies which deny bunkers to ships carrying strategic cargo to China.
UNITED STATES
Export Controls in General
The Department of Commerce is responsible for controls over nearly all commercial exportations from the United States under the Export Control Act of 1949, as extended.
The Department of State is responsible for control over the exportation of arms, ammunition, and implements of war; the Atomic Energy Commission administers controls over the export of major atomic energy items; and the Department of Treasury administers controls over the exportation of gold and narcotics. All such items required export licenses, and shipments to the Soviet bloc are not permitted.
Administration of Export Controls by Commerce Department
All commodities exported to any destination, except Canada, from the United States, its territories and possessions are subject to export control. There are three main techniques utilized in the administration of such controls:
1. Shipments of commodities contained in the Positive List 1 are under control to virtually all destinations;
2. For some commodities, a general license is authorized permitting exportation to virtually all friendly destinations without requiring that an export license be issued;
3. All commodities, whether or not on the Positive List and irrespective of any general license provisions, are under licensing control to subgroup A destinations (i.e., Soviet Bloc, including Communist China and North Korea), Hong Kong and Macao.
The Comprehensive Export Schedule published by the Bureau of Foreign Commerce (BFC) of the Department of Commerce must be consulted in order to determine whether a validated license is required for the exportation of a given commodity to a specific destination as well as to determine other export control regulations of the Commerce Department. The Comprehensive Export Schedule is supplemented 2 or 3 times a month by BFC’s Current Export Bulletin. The Secretary of Commerce’s Quarterly Report to the President and the Congress reports major policy changes and activities of the Department of Commerce in carrying out its export control activities.
The two main policies as indicated in the Export Control Act which is administered by the Department of Commerce are export controls for security and for short supply reasons. The objective of security controls as embodied in the Export Control Act of 1949, as extended, is to exercise the necessary vigilance over exports from the standpoint of their significance to the national security. The controls were designed to deny or restrict the exportation of strategic commodities to the Soviet bloc in order to impede the buildup and maintenance of the Soviet war potential. Shipments of all commodities to Communist China and North Korea are embargoed while shipments to the European Soviet bloc, Hong Kong, and Macao are either denied or restricted. In addition, all proposed shipments of strategic commodities to all destinations, except Canada, are carefully scrutinized to assure that the goods will not be transshipped or diverted to unfriendly hands. The Commerce Department has developed procedures to prevent the frustration of our own export controls which would result from shipping a strategic item to a country which (1) ships identical or closely similar items to the Soviet bloc, or (2) would use the American item directly in the manufacture of strategic items for the Soviet bloc.
In order to prevent the transshipment abroad of United States commodities, the Department of Commerce also has regulations covering the unauthorized movement of United States commodities after they leave United States shores. These regulations generally referred to as the “destination control” provisions are designed to prohibit the reexportation from the country of ultimate destination except upon written authorization from BFC. These regulations also restrict ships, planes or other carriers from delivering United States origin goods to other than the destination specified on the export control documents. In addition, the United States participates in the international IC/DV (import certificate—delivery verification) system described elsewhere in this report.
In addition to United States export controls for security reasons, it is necessary to administer export controls for short supply reasons in order to protect the domestic economy from the excessive drain of scarce materials and to reduce the inflationary impact of abnormal demand. Such controls are usually exercised by means of export programs or quotas fixed by the Secretary of Commerce. The easing of supply programs in recent months has led to the prompt lifting of nearly all domestic controls over materials: such actions have generally been followed by the relaxation of related export controls for short supply reasons. Thus, export controls for short supply reasons do not play as important a part as before in comparison with security controls.
Transit Controls
A validated export license is required for the exportation from any seaport, land frontier, airport, or foreign trade zone in the United States of certain strategic goods in transit through the United States which originate in or are destined for a foreign country. The commodities so controlled are the ones which are identified on the United States Department of Commerce Positive List by an asterisk.
Shipping Controls
Department of Commerce Transportation Order T-1 denies any United States-registered vessel or aircraft authority to carry items listed on the Positive List, or arms, ammunition and implements of war or fissionable material, to any Soviet bloc destination, Hong Kong or Macao without a validated license issued by BFC or other appropriate licensing agencies or the express permission of the Under Secretary of Commerce for Transportation. This order includes shipments from foreign ports as well as from the United States.
Department of Commerce Transportation Order T-2 has the effect of preventing the transportation of any commodities directly or indirectly to Communist China, North Korea, or areas under their control, by United States-registered vessels or aircraft. It also prohibits American ships and aircraft from calling at any port or place in Communist China.
A validated license is required for delivery in United States ports of specified types of petroleum and petroleum products to foreign vessels, if the foreign carrier has called at any point under Far Eastern Communist control, or at Macao, since January 1, 1953, or will carry commodities of any origin from the United States destined directly or indirectly for any such point within a period of 120 days in the case of a vessel, or 30 days in the case of any aircraft. This regulation also requires that if a carrier is registered in or under charter to a Soviet-bloc country or is under charter to a national of a Soviet-bloc country it will be necessary to apply to BFC for a validated license.
American petroleum companies at certain foreign ports are prohibited without a Treasury Department authorization from bunkering any vessel bound for a Communist Far East port or Macao or which is carrying goods destined for Communist China or North Korea. Similar restrictions apply to the bunkering by these companies of vessels returning from Communist Far East ports or Macao.
Financial and Transaction Controls
The Foreign Assets Control Regulations, administered by the Treasury Department, block the assets here of Communist China, North Korea and their nationals and prohibit unlicensed dealings involving property in which Communist China, or North Korea, or their nationals, have any interest. The regulations prevent the use of United States financial facilities by those countries and their nationals. These regulations also prohibit the unlicensed importation of goods of Chinese Communist or North Korean origin.
Treasury regulations also prohibit Americans, including foreign subsidiaries of United States firms, from participating in the purchase or sale of certain important commodities for ultimate shipment from any country outside the United States to the countries of the Soviet bloc. These transactions controls, which are complementary to the United States export control laws, are administered by the Treasury Department under Foreign Assets Control Regulations.
