Letter from William P. Fay to Maurice Moynihan (Dublin)
with extracts from memoranda:
'Considerations relating to the continuation of trade with the USSR and associated countries'
'Additional data concerning trade between Ireland and Communist countries'
(348/11A) (Confidential)

I am directed by the Minister for External Affairs to transmit herewith, as requested in your confidential minute (S15077) on the 2nd November,¹ two copies of a memorandum on conditions affecting the continuation of trade with the USSR and associated countries, together with a document containing some additional data on the subject.

In considering what reply should be made to the Apostolic Nuncio you will, no doubt, have regard to the fact that we have no official relations on a diplomatic or consular level with any Communist-controlled country, including Yugoslavia which is outside the Iron Curtain.

The trading to which the attached memorandum refers is on a relatively small scale and, even if the Government were disposed to interfere with it, the inconvenience involved would be disproportionate to the present volume of such trade. It will be noted, moreover, that there have been practically no exports to the USSR and associated countries in recent years.

[memorandum]

Considerations relating to the continuation of trade with the USSR and associated countries

1. Imports. A general import licensing system does not exist in Ireland. Apart from a few quotas maintained for the protection of certain Irish industries and a number of veterinary regulations which affect imports of agricultural produce, the only restriction on the freedom of Irish residents to purchase abroad is that exercised by the Foreign Exchange Control. This Control is operated for balance of payments reasons and the currency position vis-á-vis Communist countries would not at present justify any discrimination against them on balance of payments grounds. Moreover the Exchange Control does not apply to transactions within the Sterling Area. So long therefore as the Sterling Area as a whole permits trade with Communist countries, the Irish Exchange Control could not be operated effectively to prevent imports of goods from these countries since Irish residents could obtain them freely – at higher prices possibly – from Britain or other Sterling Area members which had imported them in the first instance. Accordingly the restriction of imports from Communist countries would require the establishment of a general import licensing system. The cost of such a system, together with the inconvenience which it would inevitably cause to Irish importers generally, would be entirely disproportionate to the volume of Irish imports from the Soviet bloc.
2. Exports. There have been practically no exports from Ireland to the USSR and associated countries in recent years. In fact the type of product which Ireland has for export is not in demand in these countries. The Irish Government do, however, maintain an export licensing system in the case of materials of military value with the object of preventing the consignment of such materials to Communist countries. This export control is similar to that operated for the same purpose by the United States, Canada and most Western European countries.
3. Foreign trade in Ireland is not conducted, to any considerable extent, on public account and the Irish Government have always been slow to interfere, for any reason, with the freedom of the individual to buy and sell abroad as seems best to him. Attempts to control the direction of trade inevitably give rise to administrative difficulties and are liable to cause grave hardship to individual traders. To discriminate in matters of trade between foreign countries because of the character of their Governments would entail the most awkward consequences; logically, it would require the Irish Government to pass judgment on the principle and practices of all other Governments and might be held to preclude trading with countries or areas where, although the Governments were not Communist, some fundamental human rights were denied.
4. For the Irish Government to place an embargo on trade with the Soviet bloc would mean the adoption of a policy more restrictive than that practised by other Governments in the free world, particularly those of Western Europe among whom the great economic importance of expanding East/West trade in non-military commodities is generally accepted. Both the United Nations and the Organisation for European Economic Co-operation have recognised that the restoration of East/West trade to its pre-war levels would be a most valuable contribution to the solution of Western Europe’s balance of payments problems. While such trade is of little moment from the viewpoint of the Irish balance of payments, the Irish Government would be reluctant to embrace a course which might seem to imply a criticism of the policies which other friendly Governments find necessary in their own economic interests.

Additional data concerning trade between Ireland and Communist countries

1. The following are Ireland’s imports from the USSR and its associated countries in 1952 and 1953 (January-August):-

   	1952		1953 (Jan. Aug.)
   	£		£
   USSR	60,279		118,942
   Czechoslovakia	391,552		140,520
   Eastern Germany	127,952		42,067
   Poland	115,291		1,332
   China	109,323		172,616
   Hungary
   Bulgaria	Negligible		Negligible
   Romania
   Yugoslavia	14,902
   	_________		__________
   	£819,000		£475,000
   	========		=========

2. The only Irish exports to Communist countries in 1952 were £25 to Eastern Germany and £4,912 to Czechoslovakia. During the first eight months of 1953, exports to Czechoslovakia were £25,369, to Eastern Germany £434 and to China £6,670.
3. The following is a list of Decisions by the Government in recent years concerning trade with the Soviet bloc countries:-

   4 June, 1948	Decision to purchase musical instruments for Army bands in cheapest market. As Czech firm had submitted lowest tender, Czech offer was accepted.
   5 November, 1948	Decision to regard Czechoslovakia as eligible to receive food shipments in the course of trade.
   27th February, 1953	Decision that a strict test of essentiality should be applied to proposals for imports from the Union of Soviet Socialist Republics and associated countries under Communist rule.
   18th September, 1953	Decision to permit the issue of export licences to exporters of meat to the USSR and associated countries and to adopt a similar policy towards exports of foodstuffs to those countries.
   20th October, 1953	Decision that applications to import goods or engage in other financial transactions with countries under Communist rule should be dealt with on the basis of the immediate currency position in each case.

[matter omitted]