Extracts from a memorandum for Government by the Department of Industry and Commerce
and the Department of External Affairs (Dublin)
'Trade with Communist-Controlled Countries'

1. Introduction

   Over a number of years, successive Governments have given consideration to questions of policy relating to trade dealings with countries under the control of Communist Governments. The problems involved have hitherto been concerned primarily with our imports from such countries, Irish exports to them having been insignificant. Recently, however, the prospects for such exports have improved considerably.

[matter omitted]

3. Present Position

   As a result of the Government decisions summarised above,¹ the present position in regard to trading with Communist countries is that:

   1. Private firms and individuals are free to trade in any commodity other than goods of a strategic character (in practice, scrap metals); in connection with such private trading, commercial representatives from Communist countries are permitted to enter Ireland provided they have already established relations with Irish firms and there is no political objection to them.
   2. State agencies have no commercial dealings with Communist countries; Government officials, either at home or abroad, refrain from contacts with official representatives of Communist Governments in trade matters; and officials of Communist Governments are not granted visas to enter Ireland.

4. Anomalies in Present Position

   There are certain anomalies in the present position. First, while private trade is in general free from restrictions of an official nature, Government Departments and State agencies are regarded as being prohibited from engaging in direct commercial transactions with Communist countries; as a result, State agencies dealing with export commodities are prevented from pursuing possible outlets for their products in those countries. Secondly, private traders endeavouring to sell to Communist markets do not receive the assistance from Government Departments and the Missions abroad which is normally available to them in the case of non-Communist markets; such assistance is frequently essential for transactions with the state-trading régimes of the Soviet bloc. Finally, the refusal of entry into Ireland to official representatives of Communist Governments may prevent the development of exports by private traders since examination of the goods by Government officials of the purchasing country prior to shipment is often a condition of purchase by Communist trade organisations; moreover Irish firms usually prefer to make their sales, particularly to Communist destinations, on the basis of f.o.b.² an Irish port and this may require prior examination by Communist officials.

5. Extent of Existing Trade

   Statistics are attached for the years 1947-1953 inclusive of direct trade with European countries now under Communist control, both exports to them (Annex A)³ and imports from them (Annex B).⁴ It will be observed that our trade with all these countries taken together forms only a very small fraction of our total trade i.e. 0.1% of our exports and 0.4% of imports in 1953. The statistics do not include all indirect trade with Communist countries, i.e. imports which reach us via a third country such as Britain, and exports which go from Ireland to a third country in the first instance. It is not practicable to obtain complete statistics of such indirect trade.

6. Possibility of Increased Exports

   The appearance last year of Soviet Russia as a large buyer of food-stuffs in Western European markets mentioned at 2(e) above, has been followed by considerable sales to her, and to some of her Communist neighbour countries, by such food-producing countries as Denmark and the Netherlands. Ireland has made one such sale, that of 2,000 barrels of hard cured herrings sold last April to Czechoslovakia by a Co. Donegal firm. Prospects of a similar sale, following the receipt by An Bord Iascaigh Mhara⁵ of an enquiry for hard cured herrings for Russia, fell through recently, partly because of the view that State agencies are debarred from engaging in commercial transactions with Communist countries. Apart from the Russian interest in Irish bloodstock referred to at 2(g) above, the Department of Agriculture have recently been informed of a number of other enquiries from Communist countries which taken together hold out prospects of a fairly considerable export trade. A quantity of 10,000 to 15,000 tons of beef and/or live cattle has been mentioned, for example. The Department of Agriculture have in mind also the possibility of selling to one of these countries the small export surplus of butter which is expected to arise this year, at a price which would not involve a large Exchequer subsidy.

7. Need for Further Government Decisions
   1. Even if it is assumed that the existing policy respecting imports from and exports to Communist countries is maintained, the Minister for External Affairs considers that, in the light of the possibilities for increased exports to Communist countries just mentioned, and having regard to the existing anomalies which are calculated to discourage such exports (see paragraph 4 above) it is necessary to seek from the Government further decisions on two questions viz:
      1. the question of contacts between Irish officials and officials of Communist countries;
      2. the question of admitting officials of Communist countries into Ireland.
   2. Having regard to the functions in relation to trade assigned to him under the Ministers and Secretaries Act, the Minister for Industry and Commerce⁶ considers that he should be closely associated with the submission to the Government of a Memorandum relating to the general question of trade with Communist countries. The Minister for Industry and Commerce and the Minister for External Affairs share the view that it is important that the Government should review the entire question of policy to be followed in respect of trade with Communist countries and that the present is an opportune time to do so. They have accordingly set out in summary form, the most important arguments which have been heard to date for and against trading with Communist countries.

4. Considerations against Trading with Communist Countries
   1. Hostility of Irish Public Opinion

      The most important argument against trading with Communist countries is the hostility of at least certain sections of Irish public opinion. This hostility is caused by the violently anti-Christian nature of Communism, both in theory and practice, and the view, which is almost undoubtedly well-founded, that much of a Communist country’s exports is produced by forced labour under barbarous conditions. Some Irish newspapers have vigorously condemned trade with countries under Communist rule. Thus, on the 13th January, 1953, the IRISH INDEPENDENT in a leading article called for a total ban on such trade. Correspondence published by the paper, as a result of this leading article, strongly supported the views expressed. Similar views have been put forward even more strongly from time to time by the IRISH CATHOLIC. At least two responsible organs of opinion have adopted resolutions condemning trade with Communist countries. The Irish Transport and General Workers Union, at their annual conference, passed a resolution ‘demanding that the Government ceases trading with Communist-dominated countries while our fellow-Christians are being persecuted and denied freedom of conscience in such countries’. Dún Laoghaire Borough Corporation on the 8th June, 1954, passed a resolution by six votes to three in favour of an embargo on imports of consumer goods from Communist countries. The Minister for External Affairs has also been made aware of the attitude of certain members of RGDATA⁷ who recently expressed a desire that that body should organise a boycott against consignments of prunes from Yugoslavia. It should also be noted that questions have from time to time been put to Ministers in the Dáil tending to show that at least certain parts of the electorate were anxious that their representatives should show their disapproval of this trade. In general, it may be said that whenever public opinion has been expressed on the subject it has appeared to be more or less hostile to trading with Communist countries. The sporadic nature of its manifestation is probably due to the fact that goods arrive from Communist countries in relatively small quantities and at long intervals. Thus, e.g., the leading article in the IRISH INDEPENDENT appears to have been provoked by the then recent arrival of a cargo of timber from Russia.

   2. Communist Trading Primarily Political

      The arguments used by those who have publicly opposed trading with Communist countries are usually of a somewhat emotional character well illustrated by the resolution of the IT&GWU⁸ cited in the foregoing paragraph. It can, however, be reasonably contended that all foreign trade carried on by Communist régimes is Government controlled, such trading as they permit is altogether subject to their long term political aims and is indeed openly used by them as a political weapon. Though it may be in their temporary economic interest, it is without prejudice to their ultimate aim of world revolution. It is, therefore suggested that any intercourse with them by way of trade is more or less to support, by means of goods and foreign exchange, the economic structure of Communist Governments whose aim is the overthrow of countries such as this. Despite the insignificance of Irish trade with Communist countries, refusing to trade with them would accordingly be to take such steps as this country can to avoid giving them that support. Moreover, the very insignificance of the trade itself shows that it can be dispensed with without grave loss to the Irish economy.

9. Considerations in favour of trading with Communist Countries

   The Ministers for Industry and Commerce and External Affairs recognise that some of the foregoing arguments have a certain validity; and that even if some of them are dismissed as more emotionalism, they are sufficiently widely held to be seriously considered by the Government. They are of opinion, however, and would recommend to the Government, that a sufficient answer to them may be found in the following considerations:

   1. Impracticability of Restricting Imports

      At present, goods of Communist country origin may be freely imported through third countries, e.g. Britain, and such imports could not be restricted effectively without imposing a general import licensing system. Such a system does not exist here in respect of imports apart from a few quotas which are maintained for the protection of certain industries. Following recent changes by Britain in the system of control of sterling, that currency (and thus Irish currency) now enjoys a wide measure of convertibility for current transactions with non-sterling countries (not in the dollar area), with one insignificant exception. In consequence, it would not be feasible even if it were considered desirable to use the existing exchange control system here for the purpose of restricting imports from Communist sources. Therefore, if imports from Communist countries are to be restricted, it would be necessary to adopt a system of licensing all imports, i.e. even from Great Britain and other sterling area countries. The impracticability of this is obvious. Apart from the high administrative costs which would be involved, its inconvenience to Irish importers would constitute an intolerable burden entirely disproportionate to the volume of Irish imports from Communist countries.

   2. Importance of Trade to Irish Economy

      It is not correct to say that trade with Communist countries being insignificant, it could be eliminated without loss to the Irish economy. On the contrary, as will be seen from Annex A, the principal imports from these countries in recent years have been of essentials which we should find it difficult to do without. Thus, during the coal shortage in England, we imported coal from Poland and we continue to obtain muriate of potash from East Germany. Our most important import at the moment from Communist countries, is lumber (i.e. rough-sawn timber from the USSR and Czechoslovakia). Timber imports from these countries are justified, not merely because they are generally cheaper; expert opinion is agreed that Russian red deal, which is an essential wood for all joinery purposes (and therefore for all building construction) is the best of its kind in the world and far superior to that obtainable elsewhere. Up to the Second World War it had been the universal practice of Irish timber importers to import red and white deal from Russia in preference to other suppliers.

   3. Policies of Other Non-Communist Countries

      For the Irish Government to place an embargo on trade with the Soviet bloc would mean the adoption of a policy contrary to that followed by virtually all non-Communist Governments including those of Western Europe (except Spain), the United States and Canada. The importance, on economic grounds, of expanding East-West trade is now almost universally accepted. The United Nations, the OEEC and the Council of Europe have all urged the necessity, in the economic interests of Europe as a whole, of restoring the trade between Eastern and Western Europe to at least its pre-war levels. All the countries of Europe (with the exception of Ireland and Spain), have recently attended an international conference under the auspices of the UN Economic Commission for Europe directed towards greater commercial exchange between Communist and non-Communist countries, and Western European Governments have long been encouraging their business men to seek markets in the Soviet bloc. The present United States Administration – despite its opposition to trade with China – has on several occasions expressed itself in favour of increased trading between Communist and non-Communist countries and has agreed to a considerable reduction in the lists of ‘strategic materials’ whose export to Communist destinations is prohibited by most non-Communist Governments. The Minister for External Affairs would be reluctant to agree to a course of action which might involve the suggestion that we were critical of the policies of friendly Governments.

   4. Trading not of Benefit Exclusively to Communist Parties

      The concern of non-Communist Governments to expand commercial relations with the Soviet bloc is a clear indication that the advantages of trading with Communist countries can not by any means be regarded as accruing exclusively to the Communist side. On the contrary it is obvious that the ordinary economic reasons for international exchanges of goods, i.e. benefits to both parties to the transaction, continue to operate irrespective of the political character of the régimes concerned.

   5. Restriction Contrary to Irish Government’s Normal Foreign Trade Policy

      It has, in general, been the policy of successive Irish Governments to refrain from restricting the freedom of individual traders to buy and sell abroad as seemed best to them, unless the economic interests of the country necessitated the imposition of restrictions on individual commodities or vis-á-vis specified currencies. To restrict trading with Communist countries on political rather than on economic or financial grounds would represent a departure from this principle.

10. No Objections to Exports

    The objections to trading with countries of the Soviet bloc, summarised in paragraph 8 relate almost entirely to imports from those countries. Little objection can be raised in principle to exports from Ireland to Communist markets. In particular, where the export is a foodstuff, the transaction can be regarded as tending to improve the lot of peoples living under Communist régimes. Apart from this, additional markets for Irish products, especially if they are likely to be sizeable, as may be the case where Communist countries are concerned having regard to the enormous extent of the Soviet bloc, should be welcome on economic grounds as offering the prospect of more diversified export outlets, particularly for types or quantities of products which do not command attractive prices on the British market. Relatively small exports of certain products (e.g. herrings) may have very considerable importance for certain sectors of the economy. Sales to Communist countries may also provide a useful means of disposing of occasional surpluses. Finally, if we continue to import from these countries, it is reasonable that we should endeavour to offset, as far as possible, the payments involved by exporting to the countries in question.

11. Contacts with Communist representatives

    Lastly, there is the question of what contacts with official or commercial representatives of Communist States may be permitted on the assumption that trade with such countries is to be allowed. As pointed out in paragraph 4 above, contact with representatives of Communist state-trading agencies or with official representatives of Communist Governments may be necessary for the purpose, in particular, of promoting sales to Communist countries. Commercial representatives of Communist countries are, in general permitted to enter Ireland for business purposes but the development of exports may require the admission of officials of Communist Governments; it may equally necessitate contact between Irish and Communist Missions abroad. It would clearly be futile to adopt a policy of promoting or encouraging sales to Communist countries and then to refuse the means of implementing the policy. The Minister for External Affairs, therefore, considers that such contacts with commercial or official representatives of Communist Governments as may be necessary for the purpose of promoting exports to Communist countries should be permitted but that an effort should be made to keep contacts of this nature to the minimum.

12. Having regard to the impracticability, for administrative and other reasons, of discriminating against imports from Communist countries and to the possible advantages which may be gained from permitting exports to the countries in question, the Ministers for Industry and Commerce and External Affairs submit the following recommendations for approval by the Government with the object of arriving at a logical and comprehensive policy in regard to trade with countries under Communist rule:-
    1. That, apart from exports of strategic materials, no restrictions on commercial transactions with Communist countries should be imposed other than those required by economic or financial considerations (i.e. maintenance of present position).
    2. That controls on exports of strategic materials to Communist destinations be continued (i.e. maintenance of present position).
    3. That such contacts between Irish officials and officials of Communist countries as may be necessary in the interests of Irish trade should be permitted.
    4. That such informal arrangements (but not formal trade agreements) as may be necessary for the promotion of Irish exports may be made with official representatives of Communist Governments or representatives of Communist State trading agencies.
    5. That commercial representatives from Communist countries be admitted for business purposes where they have already established contact with an Irish firm and there is no political objection to them (i.e. maintenance of present position).
    6. That, subject to necessary security precautions, and on condition that no undue publicity is given thereto, official representatives of Communist Governments may be admitted into Ireland in those cases where their presence is essential to the conclusion of an individual commercial transaction.

    Acceptance of the recommendations at (1), (2) and (5) would leave the existing position unchanged. The aim of the recommendations at (3), (4) and (6) is to remove the anomalies in the present situation described in paragraph 4 above.

13. The Minister for Agriculture⁹ has been consulted in regard to this Memorandum and agrees with its terms except that he would be opposed to the admission of officials of Communist countries as suggested at 12(6). The Minister for Finance¹⁰ has also been consulted and agrees to the submission of the Memorandum to the Government, but reserves his position as regards the recommendations in paragraph 12.