Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
266848731
label
NSDM 170
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
266848731
contentType
document
title
NSDM 170
citationUrl
collections
National Security Files (Nixon Administration)
Institutional Files
iiifBase
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
266848731
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
url
mediaId
11312b1e22467f5e
ocrText
WITHDRAWAL SHEET (PRESIDENTIAL LIBRARIES)
FORM OF
CORRESPONDENTS OR TITLE
DATE
RESTRICTION
DOCUMENT
/
distribution List
6/14/72
A
memo
FILE LOCATION
NSC H-FILES Box H-234 folder 4
RESTRICTION CODES
(A) Closed by applicable Executive order governing access to national security information.
(B) Closed by statute or by the agency which originated the document.
(C) Closed in accordance with restrictions contained in the donor's deed of gift.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NA 14029 (1-98)
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
7302886
DEPARTMENT OF STATE
899
Washington, D.C. 20520
February 15, 1973
SECRET/NODIS/HOMER
MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: Implementation of NSSM-149, China Trade
The President directed in NSDM-170 that memoranda
on the implementation of the options and recommendations
contained in NSSM-149 US-PRC Trade, be submitted from
time to time for his consideration.
Attached are State and Commerce recommendations
for further steps which might be taken to facilitate
trade between the U.S. and the People's Republic of
China.
Copies of this memorandum are being sent to CIEP
and to the Department of Agriculture.
Richard Palla L. Sneider
Chairman,
Ad Hoc Interdepartmental Group
Attachment:
Recommendations,
February 1973
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
Recommendations for Implementing NSSM-149--US-PRC Trade
This paper sets forth joint State and Commerce
Department recommendations on the sequence, timing and
implementation of certain steps proposed in NSSM-149,
US-PRC Trade, as directed in NSDM-170, dated June 8, 1972.
What has already been done
The US has proposed that negotiations be held to
resolve the linked issues of US private claims and PRC
blocked assets. Although the Chinese have not explicitly
agreed to such negotiations, they indicated they are giv-
ing "positive consideration" to the question and that "we
have made a beginning from which we can proceed steadily
to a resolution." Exchanges of information regarding
claims have begun, and negotiations appear likely to
begin soon. We believe the Chinese understand that a
claims settlement is a prerequisite to negotiating an
agreement on MFN.
We have given the Chinese lists of potential imports
and exports to and from the US. While they have not
commented on the lists, the list of potential imports was
used by the US to respond to a PRC request for the names
of US firms they could invite to the Fall Chinese Export
Commodities Fair (October 15-November 15). The Chinese
invited some of the firms on the list we provided. The
number of US firms attending the Spring Fair (36) was
doubled to 72 at the Fall 1972 Fair. The Chinese told
some American businessmen at the Fall Fair that a still
larger number of US firms is likely to be invited to the
Spring 1973 Fair (April 15-May 15).
We have told the Chinese that we are concerned about
the rising level of Chinese cotton textile goods being
imported into the United States and that it may be
necessary to establish quotas on such imports. Similarly,
the Chinese have been made aware of US laws and regulations
barring imports of certain furs, products of endangered
animal species and meat products produced in foreign
plants not subject to inspection by the USDA. We have
also informed them of the provisions of US anti-dumping
laws and regulations.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
2
Direct air and sea services appear unlikely in
advance of a private claims settlement, because a US
citizen with a claim against the PRC might initiate
legal proceedings to attach Chinese property, including
Chinose ships. However, the way has been paved for the
eventual discussion of air and sea links by the modifica-
tion of US port security regulations to permit Chinese
vessels to call at US ports and the modification of
Transportation Order T-2 to remove the restrictions on
visits to the PRC by US ships and aircraft. United
States vessels are now subject only to normal export
control requirements. The Chinese earlier gave a non-
commital response to a statement that we are prepared
to discuss establishment of scheduled air services at
an appropriate stage in the development of our economic
relations.
Since the President's trip to Peking, contracts
have been signed for the sale to China of ten Boeing 707
aircraft, two more earth satellite stations and related
equipment and shipments of wheat, corn and cotton.
Preliminary figures on US-PRC trade show about
$60.2 million in US exports in 1972. The figure could
reach $300 million in 1973. Sale to China of inertial
navigation systems for the Boeing aircraft has been
approved and licenses for an additional earth satellite
station and a Hughes Aircraft proposal for a domestic
communications satellite system are now being considered.
The Chinese have become familiar with basic export control
requirements through a variety of channels, largely
unofficial.
*
The Chinese have consistently demurred from complying
with the standard requirement for end-use/end-user in-
formation essential for the United States and the inter-
national control organization (COCOM) in making licensing
judgments regarding exports of strategic goods. Although
this was not a problem in the case of commercial aircraft
or earth satellite station sales for reasons peculiar to
these transactions, in many other types of transactions
it can constitute a serious obstacle to exports. This
problem is being separately addressed in connection with
a current transaction involving a wide range and large
quantity of sophisticated electronic instruments.
SECRET/NODIS/HONER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
3
PRC exports to the US averaged almost $3 million
per month during 1972 for a year-end total of about
$32.3 million. There is likely to be a substantial
increase in the monthly average for 1973 because of
contracts signed by US businessmen at the 1972 Tall
Canton Fair.
The Chinese have been informed of our intention to
establish a National Council for the promotion of US-
China trade. The President has approved establishment
of the Council which is now being formed by the Depart-
ment of Commerce in consultation with the Department of
State.
RECOMMENDATIONS
1. Encourage the Council to organize a vanguard
trade delegation to the PRC (NSSM-149, Option 7). AS
noted above, we have already informed the Chinese that
the Council would be organizing a trade delegation of
"prominent US businessmen and one or more US Government
representatives to visit Chinese foreign trade corpora-
tions, research institutes, marketing agencies and trade
fair authorities in the PRC." In view of the positive
Chinese response to this proposal, the organization of
such a trade delegation should be among the first acts
of the Council.
Approve
Disapprove
2. Provide the Council's delegation with a highly
selective list of trade fairs in the US and encourage
PRC attendance at such fairs (NSSM-149, variant of
Option 14). The Council's vanguard trade delegation
should be given a list of trade fairs in the US at which
PRC attendance would be appropriate. The list, to be
prepared by the Department of Commerce in consultation
with the Department of State, would be submitted
separately for approval. The trade fairs should be
selected on the basis of the following criteria: (1) the
exhibitions feature items included in the list of potential
US exports to the PRC earlier provided to the Chinese
which do not create export control problems, and (2) no
official participation by the Republic of China (ROC) is
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/OMER
4
anticipated. The Council's trade delegation would
deliver the list to the Chinese together with appropriate
material on individual expositions, and could discuss the
possibility of PRC attendance. The Chinese could then be
informed in Paris that the USG would incilitate their
attendance at any of the listed fairs.
Approve
Disapprove
3. Provide the Council with assistance in
formulating a proposal Ior a comprehensive solo exhibit
in Peking or another Chinese citv for presentation to the
Chinese authorities by the Council's trade delegation
(NSSM-149, Option 10). The Department of Commerce would
assist the Council in formulating such a proposal for
discussion with the Chinese during the trade delegation's
visit to Peking. The goods to be exhibited should be
chosen according to: (1) their potential for market-
ability in the PRC, (2) the prospect of their sale at the
exhibition, (3) the likelihood of their being approved
for export, and other appropriate criteria.
Approve
Disapprove
4. Encourage the Council to inform the Chinese that
it would be willing to host a reciprocal PRC comprehensive
solo exhibit in the US at an appropriate time (NSSM-149,
Option 13). A PRC trade exhibit in the US would probably
have to await settlement of the private claims issue to
avoid the danger of attachment by US private claimants.
However, once a claims settlement has been concluded,
such an exhibit would be appropriate and feasible, and
should be undertaken.
Approve
Disapprove
5. Offer to provide the Chinese with a list of US
exporters in product areas of interest to the PRC. The
United States has already provided the PRC with a list
of US importers. We should offer to provide a similar
list of US exporters; this might facilitate the purchase
of US goods by the PRC. Such a list should be based on
the list of potential US exports provided to the PRC
earlier. This list could be revised periodically to
include additional firms with demonstrated interest and
competence. The Department of Commerce should select
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
5
firms according to the following criteria: (1) large,
medium and small size firms would be represented;
(?) all would be established, reputable firms with good
credit ratings; (3) lians would be representative of
brond geogrephic distribution in the US; (4) firms with
extensive exporting experience in the categories of
goods listed. In accordance with Option 26 of NSSM-149,
this would also provide 32 opportunity to bring US
grain exporting firms to the attention of the PRC. The
Chinese have thus far only purchased US agricultural
commodities through third country firms. In view of the
PRC's recent purchases of cotton, firms specialized in
exporting cotton should also be added to the list.
If this recommendation is approved, a consolidated
list of US exporters prepared by the Department of
Commerce in consultation with the Department of
Agriculture could be transmitted to the Chinese through
the Paris contact point and/or through the National
Council that will soon be established.
Approve
Disapprove
6. Seek Legislation to Eliminate the Embargo on
Importing Certain Categories of Soviet and Chinese Furs
(NSSM-149, Option 24). NSSM-149 called attention to the
desirability of eliminating the legislative ban on
imports of certain furs, (ermine, fox, kolinsky, marten,
mink, muskrat and weasel) from the USSR and China. Both
the PRC and the USSR export these skins and have com-
plained about this discriminatory restriction. Eliminat-
ing this restriction would be in line with our policy of
promoting East-West trade.
However, as NSSM-149 notes (p. 68 ), "there are
domestic interests involved (mink and fox ranchers) and
the Department of Agriculture has indicated that it
opposes a change in the legislation on the grounds that
admitting these skins would injure the American Fur
ranching industry."
State and Commerce favor general removal of
discriminatory restrictions on trade with the USSR and
China which are not supportable on strategic grounds
and which pose a needless irritant to the PRC and USSR.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
6
Noting that removal of the restriction would be welcomed
by furriers in the US as well as by the PRC and the USSR,
both Departments again urge that consideration be given to
its early elimination in connection with whatever legisle-
tion is introduced in the 90rd Congress to give the USSR
MFN status. Should imports of such furs (mink and fox)
later prove injurious to the fur renching industry, the
President could act to protect the US market from dis-
ruption under existing legislative authority (e.g.,
escape clause of the Trade Expansion Act). Alternatively,
he could take action under the anti-market disruption
provision of the US-USSR Trade Agreement and negotiate
similar voluntary quota restrictions with the PRC (which
in any event is able to export a considerably smaller
quantity of furs than the USSR can export.)
Approve
Disapprove
As directed by NSDM-170, the Departments of State
and Commerce will periodically submit further recom-
mendations for actions that could be taken by the
US Government to facilitate trade with the People's
Republic of China.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. 20506
June 14, 1972
MEMORANDUM FOR RECIPIENTS
OF NSDM 170/CIEPDM 7
Subject:
Change of Date
The date of NSDM 170/CIEPDM 7 should be changed
to June 8, 1972.
Jeanne W. Davis
Staff Secretary
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
5499
THE SECRETARY OF THE TREASURY
WASHINGTON
JUL 1 3 1972,
MEMORANDUM FOR THE HONORABLE HENRY A. KISSINGER
ASSISTANT TO THE PRESIDENT
FOR NATIONAL SECURITY AFFAIRS
SUBJECT: U.S. - PRC TRADE
In response to your request contained in NSDM 170 and
CIEP DM 7, enclosed is the report of an interagency committee
composed of representatives of State, Commerce, Eximbank and
Treasury.
eport has the approval of the participating
The report outlines the possible courses of action from
the point of view of the effect of the debts on lending to
the PRC, but does not recommend a policy. I would like to
discuss with you the important policy implications of possible
Eximbank lending to the PRC.
Sr P. Sheety
Enclosure
CC: Mr. Flanigan
AA 4144-1
Reproduced at Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
Davis FYI
DOC
RECD
LOG NBR
MO DA
MO DA HR
NSC CORRESPONDENCE PROFILE
7
13
7
14
11
5499
Holdridge INITIAL ACTION OFF
X
LOG IN/OUT ONLY
TO: PRES
FROM: ELIOT
U
NO FORN
NODIS
KISSINGER x
ROGERS, W
LOU
BUO
EXDIS
DOC SOURCE/CLASS/DESCRIPTION
HAIG
LAIRD, M
C
EYES ONLY
LIMDIS
SHULTZ, G
S
CODE WORD
RES DATA
TS
SENSITIVE
SUBJECT:
response to M.SOM CIEPOM
OMB options paper on PRC outstanding 7 Exembank debts
REFERENCE: S/S
OTHER
NOT XEROXED
APP'TS: PRES
HAK
TALKER
MEMCON
DATE REQ.
INTERNAL ROUTING AND DISTRIBUTION
ACTION REQUIRED
ACTION
INFO
REC
X
MEMO FOR HAK
(
-
CY
ADVANCE CYS TO AAK/HAIG
FOR
MEMO FOR PRES.
1
)
STAFF SECRETARY
x
X/pine
REPLY FOR
SIGNATURE
(
)
FAR EAST
FOR DISTRIBUTION/DISPATCH
(
)
SECRETARIAT DISTRIBUTION/ACTION
SUB-SAHARAN AFRICA
MEMO
TO
(
-
NR EAST NORTH AFRICA
RECOMMENDATIONS
(
)
EUROPE/CANADA
JOINT MEMO Ac tion
X
(
)
LATIN AMERICA
REFER TO STATE
(
)
UNITED NATIONS
ANY ACTION NECESSARY
(
)
ECONOMIC
X
CONCURRENCE
(
)
SCIENTIFIC
DUE DATE: 7/21
LR PLANNING
COMMENTS: (Including Special Instructions)
PROGRAM ANALYSIS
NSC PLANNING
X
CONGRESSIONAL
crass of will 3556
DATE
FROM
TO
S
ACTION REQUIRED
CY TO
INTERNAL/INTERIM ROUTING
MICROFILM DATA
CROSS REF WITH
NOTIFY
DATE
SEE LOG
DISPATCH: LETTER/MEMO
DO
INIT
DISPOSITION
JOINED BY LOG
COPIES: (AS MARKED ABOVE)
DATE
SPECIAL FILE RQMT:
SA,
HP,
HM
ORIG)
NSC
SPECIAL DISPOSITION COMMENTS:
TO 1
PAF
WHC
SUSPENSE CY ATTACHED:
YES
NO
SUBF
Reproduced at the Richard Nixon Presidential Library
# GPO: 1972-455-927
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
OPTIONAL FORM NO. 10
MAY 1262 EDITION
GSA FPMR (41 CFR) 101-11.0
UNITED STATES GOVERNMENT
Memorandum
SECRET
TO
: Deputy Under Secretary Bennett
DATE: July 3, 1972
Chairman, Ad Hoc Inter-agency Committee
FROM :
Report of Inter-agency Committee; Alleged Debt
SUBJECT: Delinquency of People's Republic of China
The Inter-agency Committee was requested to "consider
the alleged failure of the People's Republic of China to
repay certain debts to the Export-Import Bank and the effect
of this alleged failure on the eligibility of the PRC for
the use of Export-Import Bank financing facilities."
The basic facts concerning these debts are as follows:
In 1946, Eximbank made four unsecured loans to the
Republic of China (ROC) in principal amounts totaling $29
million. The loans were made for the purpose of financing
cargo vessels; procuring electric power equipment and engi-
neering services; railway construction materials; and coal
mining machinery and equipment. The ROC stopped payment on
these loans on April 1, 1949.
In 1961, following extensive negotiations, the ROC
agreed to undertake payments on the portion of the loans
that could, according to the ROC's representation at the
time, be imputed to materials and equipment utilized on
Taiwan, as well as the applicable share of the interest
accrued between April 1949 and December 1960. The re-
negotiated portion of the debt, which consisted of approxi-
mately $2.6 million in principal and $1 million in interest,
was repaid by the ROC, together with current interest on
principal, in twenty semi-annual payments ending on
January 1, 1971.
The agreement of 1961, as evidenced by the Bank's
letter to Ambassador Yeh, dated May 11, 1961, granted a
moratorium on payment of that portion of the loans which,
according to the ROC, were not used on Taiwan. As the
letter stated in relevant part, in consideration for re-
suming payment on the agreed portion of the loans, "Eximbank
agrees to forebear and take no action with respect to the
remaining balance of the indebtedness of the Republic of
China until such time as the matter may be opened for dis-
cussion by Eximbank or your Government." The letter
further stated that in the event of a default on the agreed
SECRET
AA 4070
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 2 -
installments, Eximbank will be free to take such
action with respect to the total indebtedness of your
Government as it may deem appropriate."
When discussions concerning the remaining portion of
the debt were resumed by the Eximbank and ROC in 1967, ROC's
legal responsibility for the debt was recognized again.
According to a Bank memorandum of conversation dated
February 20, 1968, Vice President Sauer, who had raised
this matter with Minister Counselor Wong, suggested "that
the Government of China direct its attention to these obli-
gations, recalling that there had been no question, in the
earlier negotiations as to their validity." Minister Wong,
in turn, while recognizing " . . that there had been no
repudiation or denial of the obligations
"
questioned
whether it was the proper time to resume payments in view
of the status of the Chinese economy.
The status of the debt to Eximbank, which the Bank
carries on its list of delinquencies under "China (Mainland)
was as follows on March 31, 1972.
Credit
Principal
Delinquent
Delinquent
Total
No.
Outstanding
Principal
Interest
Delinquent
Purpose
396
292,300
292,300
235,600
527,900
Cargo Vessels
397
7,949,200
6,509,200
5,487,500
11,996,700
Power Generating
Equipment
398
16,650,000
13,653,000
11,498,100
25,151,100
Railway Repair
Materials
399
1,494,500
1,494,500
1,032,000
2,526,500
Coal Mining
Equipment and
Supplies
26,386,000 21,949,000 18,253,200 40,202,200
These figures do not include interest accrued on overdue
interest, which Eximbank normally calculates only at the
time of final settlement. The additional amount due on this
account, as of the date of the above figures, is of the
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 3 -
rough order of magnitude of $6 million. Thus the total
approximate delinquent amount is $46 million.
The four 1946 Eximbank loans to the ROC are only a
part of the ROC's debts to the USG. The ROC has acknowledged
a lend-lease obligation of $81.6 million, representing
civilian-type articles furnished during the war, and in the
possession of the ROC on VJ Day, as well as lend-lease aid
after VJ Day covered by specific arrangements. The $81.6
million covered by these arrangements is only a small part
of the $1.6 billion in lend-lease furnished to China during
World War II. Other ROC debts to the USG include a surplus
property claim against the ROC of about $5.8 million in
arrears; about $45 million under a 1946 Bulk Sale Agreement;
and about $20 million under a 1945 "West China Balance"
agreement.
The fixing of responsibility for the 1946 Eximbank
loans is complicated by the fact that the U.S. continues
to recognize and maintain diplomatic relations with the
ROC and has not recognized the PRC. The U.S. normally
looks to the government of a foreign state recognized by
it for fulfillment of that state's financial obligations.
Ultimate liability and means or method of settlement
of these debts appear to the committee to involve both
difficult issues of international law and delicate political
questions which it seems neither possible nor necessary to
resolve at the present time. However on the basis of
available facts, it is possible to draw certain conclusions.
1. The debts exist as valid receivables of Eximbank,
i.e., they represent credits disbursed and not
repaid or otherwise settled.
2.
They are state obligations of China validly
entered into by its government.
3. In the light of the letter of May 11, 1961,
referred to above, in which Eximbank agreed
"
to forebear and take no action with
respect to the remaining balance of the in-
debtedness of the Republic of China until
such time as the matter may be opened for
discussion these debts are not now in
default. However, Eximbank could, as a legal
matter, place the ROC in default by opening
the issue for discussion and demanding repay-
ment.
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 4 -
4.
Eximbank appears never, either explicitly or
by implication, to have released the ROC from
these obligations and the ROC, as recorded in
the Eximbank Memorandum of Conversation of
February 20, 1968, cited above, recognized
their validity.
5.
In the event of U.S. recognition of the PRC as
the successor government to the government of
the ROC for the State of China, Eximbank would
have a clear legal basis for holding the PRC
responsible for these debts.
6.
In the event of less than full succession by
the PRC (with, for example, the U.S. recognizing
the PRC in addition to the ROC), there would be
no clear legal basis for PRC liability, although
there are some precedents where by agreement
there has been a division of financial responsi-
bility for debts, depending upon benefit.
7.
As a matter of law, Eximbank is entitled to look
to the ROC for payment and the U.S. has the
option to make no claim against the PRC. In
this case, the debts would not constitute an
obstacle to Eximbank lending to the PRC.
8.
Should a policy decision be made to look to the
PRC for repayment, there are precedents in inter-
national practice which would support a request
to the PRC for agreement to assume these debts,
on the theory that the mainland benefitted from
the utilization of the loans. However, our non-
recognition of the PRC would militate against PRC
acceptance of responsibility for the loans; also,
should a claim be made against the PRC and should
the PRC refuse repayment, future Eximbank lending
to the PRC would raise questions in the light of
Eximbank's policy against lending to debtors in
default. However, the PRC could not, in any event,
be "in default" until there had been a formal
demand for repayment and the demand had been re-
fused by the PRC. Even if the PRC were considered
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
- 5 -
in default, this would not, as a legal
matter prevent Eximbank's lending to the PRC
although it would be contrary to the long-
standing policy of Eximbank and the National
Advisory Council.
9.
A middle course between 7 and 8 would be to
seek PRC acceptance of responsibility on the
benefit-of-use theory, without holding the
PRC in default. Under this course, Eximbank's
default policy would not constitute an impedi-
ment to lending to the PRC.
Any future policy determination on the issue of responsibility
for the Eximbank debts must take into account the following
factors:
1. Eximbank loans are among a number of ROC debts to
the U.S. Government which have been in suspense since at
least 1961, and any decision regarding Eximbank's loans will
have inevitable implications for the resolution of the larger
question of the ROC's debt to the U.S. Government and to the
U.S. Government's claims, both public and private, against
the PRC.
2. We could seek PRC agreement to assume the debt obliga-
tions on the benefit theory (as described in numbered para-
graph 9 above) without changing our recognition policy or our
support for the ROC's international position, but any such
agreement could raise questions about the ROC's claim to
legitimacy.
3. Any decision as to ultimate settlement of these
debts will have implications for potential delinquencies in
other areas.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
Davis
DOC
RECD
LOG NBR
INITIAL ACTION OFF
MO DA
MO A HR
NSC CORRESPONDENCE PROFILE
FROM: FYIX ELIOT
77
780
5356
Homats
LOG IN/OUT ONLY
TO: PRES
U
NO FORN
NODIS x
KISSINGER X
ROGERS, W
LOU
BUO
EXDIS
DOC SOURCE/CLASS/DESCRIPTION
HAIG
LAIRD, M
C
EYES ONLY
LIMDIS
H
CODE WORD
RES DATA
SUBJECT: Cables us- PRC Trade TS SENSITIVE implementy
REFERENCE:
S/S
7211657
OTHER
NOT XEROLED
APP'TS: PRES
HAK
TALLER
MEMOR
DATE REQ.
INTERNAL ROUTING AND DISTRIBUTION
ACTION REQUIRED
ACTION INFO
REC
MEMO FOR HAK
(
X
)
CY
ADVANCE CYS TO HAK/HAIG
MEMO FOR PRES.
(
)
STAFF SECRETARY
REPLY FOR
SIGNATURE
1
)
FAR EAST
FOR DISTRIBUTION/DISPATCH
(
)
SECRETARIAT DISTRIBUTION/ACTION
SUB-SA HRAN AFRICA
MEMO
TO
(
)
NR EAST/NORTH AFRICA
RECOMMENDATIONS
1
)
EUROPE/CANADA
JOINT MEMO
(
)
LATIN AMERICA
REFER TO STATE
(
!
UNITED NATIONS
ANY ACTION NECESSARY
(
)
ECONOMI C
body
the
x
CONCURRENCE
(
)
SCIENTIFIC
DUE DATE: 7/10
LR PLANNING
COMMENTS: (Including Special Instructions)
PROGRAM ANALYSIS
NSC PLANNING
CONGRESSIONAL
to
X
DATE
FROM
TO
S
ACTION REQUIRED
CY TO
INTERNAL/INTERIM ROUTING
MICROFILM DATA
CRO SSREF WITH
NOTIFY
DATE
DISPATCH: LETTER/MEMO
DO
SEE LOG
INIT
DISPOSITION
JOINED BY LOG
COPIES :(AS MARKED ABOVE)
DATE
SPECIAL FILE RQMT:
SA,
HP,
HM
ORIG)
NS c
S PEGAL DIS POSTION COMMENTS:
TO )
PAF
WHC
US PENSECY ATTA CIED: YES
NO
SUBF
* GPO: 1972-455-927
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
7211657
DEPARTMENT OF STATE
Washington, D.C. 2C520
July 7, 1972
SECRET/NODIS/HOMER
MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: US - PRC Trade
The attached draft cables to Paris implementing
the proposals of NSSM-149 are forwarded for your
clearance. They have been modified in accordance with
NSDM-170 and to take account of discussions on trade
matters during the "counterpart meetings" in Peking,
June 19 - 23, 1972.
Ratiriller
Robert H. Miller
Acting Executive Secretary
Attachments:
As Stated
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322{0CR}
SECRET
EA/ACA: CWFREEMAN, JR. : MFC
7/5/72 EXT 22657
EA/ACA: RWSULLIVAN
PRIORITY
PARIS
NODIS/HOMER
RUS
FOR AMBASSADOR ONLY
CWFCK
SUBJ: US-PRC TRADE
1. WE BELIEVE THAT YOU SHOULD SEEK AN EARLY APPOINTMENT
WITH THE PRC CHARGE' TO INFORM THE PRC OF A NUMBER OF CON-
CRETE ACTIONS THE US HAS TAKEN OR IS TAKING TO IMPLEMENT
THE TRADE SECTIONS OF THE SHANGHAI COMMUNIQUE.
2. WE HAVE PREPARED A LIST OF IMPORTS AND EXPORTS THAT
APPEAR TO OFFER THE GREATEST POTENTIAL FOR US-PRC TRADE.
LIST FOLLOWS IN SEPTEL. YOU SHOULD INDICATE TO THE CHINESE
THAT THIS LIST IS MERELY PRELIMINARY. WE WOULD WELCOME
THEIR COMMENT ON IT AND CLARIFICATION FROM THEM OF WHAT
THEY WOULD LIKE TO BUY AND SELL. WE FOR OUR PART ARE
PREPARED TO PROVIDE THEM WITH WHATEVER COMMERCIAL INFORMA-
TION THEY WOULD LIKE- INCLUDING ECONOMIC DATA, MARKET
INFORMATION, TRADE REGULATIONS, ETC. WE HOPE THAT THEY
WILL BE ABLE TO PROVIDE US WITH SIMILAR INFORMATION IN
RETURN.
3. YOU SHOULD INFORM THE CHARGE' THAT WE WILL CONSIDER
FAVORABLY EXPORT LICENSE APPLICATIONS FOR A BROAD RANGE OF
COMMODITIES IN LINE WITH NORMAL EXPORT CONTROL REQUIRE-
MENTS, INCLUDING APPROPRIATE INFORMATION ON INTENDED END
USE OF COMMODITIES PURCHASED.
SECRET
INDIAN
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
2
4. YOU SHOULD INFORM THE CHARGE' THAT WE ARE ABOUT TO
ENCOURAGE THE FORMATION OF A COUNCIL OF PROMINENT BUSINESS-
MEN AND MANUFACTURERS DEDICATED TO THE PROMOTION OF US-PRC
TRADE. THE COUNCIL WILL BE IN TOUCH WITH THE CHINA
COUNCIL FOR THE PROMOITION OF INTERNATIONAL TRADE {CCPIT}
AND MAY WISH TO SPONSOR A VANGUARD TRADE DELEGATION OF
PROMINENT US BUSINESSMEN AND ONE OR MORE US GOVERNMENT
REPRESENTATIVES TO VISIT CHINESE FOREIGN TRADE CORPORA-
TIONS, RESEARCH INSTITUTES, MARKETING AGENCIES AND TRADE
FAIR AUTHORITIES IN THE PRC IF THIS PROVES ACCEPTABLE
AND OF INTEREST TO BOTH SIDES. WE WILL INFORM AMBASSADOR
HUANG WHEN THE COUNCIL HAS BEEN FORMED AND WILL REQUEST
HIS ASSISTANCE IN FACILITATING CONTACT BETWEEN IT AND THE
CCPIT.
5. WE HAVE PREPARED A MEMORANDUM SETTING FORTH POSSIBLE
FUTURE TOPICS FOR DISCUSSION IN PARIS BETWEEN YOU AND
AMBASSADOR HUANG OR YOUR REPRESENTATIVES. YOU SHOULD
LEAVE THE MEMORANDUM, WHICH FOLLOWS SEPTEL, WITH THE
CHARGE', INDICATING THAT THESE ARE TOPICS WE BELIEVE IT
DESIRABLE TO DISCUSS LATER AT TIMES TO BE MUTUALLY AGREED.
WE WOULD WELCOME COMMENTS AND THE PROPOSAL OF ADDITIONAL
TOPICS BY THE CHINESE SIDE AFTER HE THE CHINESE SIDE HAS
HAD AN OPPORTUNITY TO STUDY IT.
6. WHEN YOU HAND THIS MEMORANDUM TO THE CHINESE YOU SHOULD
TAKE THE OPPORTUNITY TO INFORM THEM THAT WE ARE PREPARING
FURTHER MEMORANDA ON THE SUBJECTS OF RESTRICTIONS ON
IMPORTATION OF COTTON TEXTILES AND PRODUCTS OF CERTAIN
ENDANGERED ANIMAL SPECIES, AS WELL AS ON US ANTI-DUMPING
REGULATIONS. WE EXPECT TO BE ABLE TO HAND THESE TO THE
CHINESE IN THE NOT TOO DISTANT DEFUTURE.
GP-3 YY
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322{0CR}
SECRET
EA/ACA: CWFREEMAN, JR. : MFC
7/5/72 EXT 22657
EA/ACA: RWSULLIVAN
PRIORITY
PARIS
NODIS/HOMER
RWS
FOR AMBASSADOR ONLY
CWFCT
SUBJ: US-PRC TRADE -- MEMORANDUM TO BE LEFT WITH
AMBASSADOR HUANG
REF: STATE
A. THE UNITED STATES NOTES THAT THERE ARE A NUMBER
OF HIGHLY TECHNICAL AND SPECIALIZED SUBJECTS RELATING TO
THE FACILITATION OF TRADE BETWEEN THE UNITED STATES AND
THE PEOPLE'S REPUBLIC OF CHINA WHICH COULD BE THE TOPIC OF
DISCUSSION IN PARIS AT TIMES TO BE DETERMINED BY MUTUAL
AGREEMENT.
WE WOULD WELCOME AN OPPORTUNITY FOR EARLY DISCUSSION
OF THE FOLLOWING SUBJECTS IN PARTICULAR:
], . SETTLEMENT OF PRIVATE CLAIMS BETWEEN THE TWO COUNTRIES.
WE RECALL THAT SECRETARY OF STATE ROGERS P*RAISED THIS
ISSUE IN INFORMAL CONVERSATION WITH MINISTER OF FOREIGN
AFFAIRS CHI P'ENG-FEI IN PEKING AND THAT THE MINISTER
INDICATED THAT THIS WAS A MATTER WHICH COULD BE DISCUSSED
BY THE TWO SIDES. IT WAS ALSO RAISED IN THE MORE RECENT
"COUNTERPART" CONVERSATIONS IN PEKING THIS JUNE. WE BELIEVE
THAT THE TIME HAS NOW COME TO BEGIN OUR DISCUSSION OF THIS
PROBLEM. WE REMAIN CONCERNED THAT PRIVATE CLAIMANTS MAY
SECRET
ESSAN
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
2
ATTEMPT TO ATTACH CHINESE COMMERCIAL PROPERTY FO SHIPS
WHICH COME WITHIN THE JURISDICTION OF U.S. COURTS BY
BRINGING LAWSUITS AS TRADE DEVELOPS BETWEEN OUR TWO COUNT-
RIES. WE WOULD BE UNABLE TO PREVENT SUCH SUITS DESPITE THE
ADVERSE IMPACT THAT THEY WOULD HAVE ON THE PROGRESSIVE
DEVELOPMENT OF MUTUALLY BENEFICIAL TRADE BETWEEN THE US
AND CHINA. WE ARE AWARE THAT CHINA MAY WISH TO ASSERT
CLAIMS FOR ASSETS BLOCKED IN THE US SINCE 1950. IN THESE
CIRCUMSTANCES WE BELIEVE THAT OUR TWO COUNTRIES SHOULD
BEGIN NEGOTIATIONS SOON TO REACH AN EQUITABLE SETTLEMENT
OF PRIVATE CLAIMS BEFORE TRADE REACHES DIMENSIONS WHICH
MIGHT PROMPT A CLAIMANT TO INITIATE A COURT SUIT. SUCH A
SETTLEMENT WOULD SIGNIFICANTLY FACILITATE THE LONG-TERM
GROWTH OF TRADE BETWEEN OUR TWO COUNTRIES. US CLAIMS HAVE
BEEN INVENTORIED AND EVALUATED IN PRE-ADJUDICATION PRO-
CEEDINGS BY THE US FOREIGN CLAIMS SETTLEMENT COMMISSION.
THE FINDINGS OF THE COMMISSION ARE A MATTER OF PUBLIC
RECORD. WE WILL SUPPLY A COPY TO THE CHINESE EMBASSY IN
PARIS.
2. SCHEDULED AIR SERVICE BETWEEN THE TWO COUNTRIES. ONE
OBVIOUS WAY OF FACILITATING TRADE MIGHT BE TO INAUGURATE
SCHEDULED AIR SERVICE BETWEEN THE UNITED STATES AND THE
PEOPLE'S REPUBLIC OF CHINA. ACTION BY THE U.S. CIVIL
AVIATION BOARD WOULD BE NECESSARY TO DETERMINE WHICH U.S.
AIRLINE WOULD BE AUTHORIZED TO SERVE AIR ROUTES WHICH
MIGHT BE ESTABLISHED BY MUTUAL AGREEMENT BETWEEN OUR TWO
COUNTRIES. WE WOULD WELCOME AN EXPRESSION OF THE CHINESE
VIEW ON INAUGURATION OF RECIPROCAL SCHEDULED AIR SERVICE
AT AN APPROPRIATE TIME.
3. IN THE TALKS IN PEKING THE CHINESE SIDE RAISED THE
ISSUE OF MOST FAVORED NATION STATUS AND THE EFFECT THAT
THE LACK OF IT WOULD HAVE ON THE DEVELOPMENT OF TRADE
RELATIONS BETWEEN OUR TWO COUNTRIES. THE US SIDE HAS
AGREED THAT THE QUESTION OF MOST FAVORED NATION STATUS CAN
BE TAKEN UP AS A MATTER OF PRINCIPLE AT AN APPROPRIATE
STAGE IN THE DEVELOPMENT OF OUR ECONOMIC RELATIONS. THE
US HAS FURTHER NOTED THAT SUCH STATUS IS CUSTOMARILY
CONFERRED AFTER NEGOTIATION OF A BILATERAL AGREEMENT AND
THAT SPECIAL LEGISLATION MUST BE SOUGHT FROM THE U.S.
CONGRESS IN ORDER TO CONFER MOST FAVORED NATION STATUS
UPON SOCIALIST STATES. AT PRESENT ONLY POLAND AND
YUGOSLAVIA HAVE SUCH STATUS AMONG EASTERN EUROPEAN STATES,
AND LEGISLATION IS PENDING IN CONGRESS TO GRANT MOST FAV-
ORED NATION STATUS TO ROMANIA. WE WOULD BE PREPARED TO
ENTER NEGOTIATIONS ON MFN WITH THE PEOPLE'S REPUBLIC OF
CHINA AT A MUTUALLY CONVENIENT TIME.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
I
3
4. THE PROBLEM OF INDUSTRIAL PROTECTION. WE NOTE THAT
THE PEOPLE'S REPUBLIC OF CHINA IS NOT A SIGNATORY OF
INTERNATIONAL CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY {PARIS UNION}. NEVERTHELESS, WE ARE PREPARED TO
FACILITATE CHINESE REGISTRATION OF TRADEMARKS AND PATENTS
IN ACCORDANCE WITH OUR LAWS AND REGULATIONS. WE WOULD
WELCOME RECIPROCAL TREATMENT FOR OUR CITIZENS BY THE
PEOPLE'S REPUBLIC OF CHINA.
B. THE UNITED STATES ALSO WISHES TO INFORM THE
PEOPLE'S REPUBLIC OF CHINA OF LONG-STANDING RESTRICTIONS
IMPOSED BY LEGISLATION ON THE IMPORTATION OF CERTAIN KINDS
OF MEAT AND FURS. THEY ARE DESCRIBED INT
OF MEAT AND FURS. THEY ARE DESCRIBED IN THE ATTACHED
ANNEX TO THIS MEMORANDUM. SHOULD THE CHINESE SIDE so
DESIRE, WE WOULD BE PLEASED TO EXPLAIN THESE IN DETAIL.
GP S&P-
GP-3 YY
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322{0CR}
SECRET
EA/ACA: CWFREEMAN, JR. : MFC
7/5/72 EXT 22657
EA/ACA: RWSULLIVAN
PRIORITY
PARIS
NODIS/HOMER
RWS
FOR AMBASSADOR ONLY
CWF27
SUBJ: US-PRC TRADE -- MEMORANDUM TO BE LEFT WITH PRC
AMBASSADOR OR CHARGE' - ANNEX
REF: STATE
1. RESTRICTIONS ON IMPORTATION OF CERTAIN KINDS OF MEAT.
SEVERAL ACTS OF CONGRESS REQUIRE THE U.S. SECRETARY OF
AGRICULTURE TO ASSUME THE RESPONSIBILITY FOR PROTECTING
THE UNITED STATES AGAINST DISEASES OF FOREIGN ORIGIN.
THE ACT OF JUNE 17, 193910, CONTAINS AN ABSOLUTE
PROHIBITION AGAINST THE IMPORTATION INTO THE UNITED STATES
OF DOMESTIC RUMINANTS OR SWINE AND FRESH, CHILLED, OR
FROZEN MEAT OF ALL RUMINANTS OR SWINE FROM COUNTRIES
DECLARED TO BE INFECTED WITH FOOT-AND-MOUTH DISEASE OR
RINDEREPEST. ONCE SUCH DECLARATION IS MADE, NO GOVERN-
MENTAL AGENCY HAS ANY DISCRETIONARY AUTHORITY AND THE
PROHIBITION IS ABSOLUTE. BOTH FOOT-AND-MOUTH DISEASE AND
RINDERPEST ARE BELIEVED TO EXIST IN THE PEOPLE'S REPUBLIC
OF CHINA.
IN ADDITITION TO THE PROHIBITORY STATUTE, THERE ARE A
NUMBER OF OTHER ACTS OF CONGRESS WHICH PROVIDE THE SECRETARY
OF AGRICULTURE WITH THE AUTHORITY AND RESPONSIBILITY FOR
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
2
ESTABLISHING RESTRICTIONS APPLICABLE TO THE IMPORTATION OF
ANIMALS OR ANIMAL PRODUCTS THAT MIGHT TRANSMIT DISEASES OF
LIVESTOCK AND POULTRY. THE DEPARTMENT'S CURRENT IMPORT
RESTRICTIONS ARE APPLICABLE TO CATTLE, SHEEP, GOATS,
OTHER RUMINANTS, SWINE {INCLUDING DOMESTIC HOGS AND ALL
VARIETIES OF WILD HOGS}, HORSES {INCLUDING MULES, BURROS,
ZEBRAS}, DOGS TO BE USED AROUND LIVESTOCK, AND POULTRY
{CHICKENS, DUCKS, GEESE, SWANS, TURKEYS, PIGEONS, DOVES,
PHEASANTS, GROUSE, PARTRIDGES, QUAIL, GUINEA FOWL, PEAFOWL,
AND HATCHING EGGS FROM THESE BIRDS}. RECENTLY PSITTACINE
BIRDS AND GREATER AND LESSER HILL MYH BIRDS HAVE BEEN
ADDED TO THE RESTRICTED LIST BECAUSE OF NEWCASTLE DISEASE.
OTHER ANIMAL PRODUCTS ARE POTENTIALLY ELIGIBLE BUT ALL
ARE REQUIRED TO BE CONSIGNED TO SPECIFICALLY APPROVED
ESTABLISHMENTS FOR FURTHER TREATMENT OR PROCESSING. MEAT
PRODUCTS, FULLY COOKED BY A COMMERCIAL METHOD AND PROPERLY
CANNED MAY BE PERMITTED ENTRY INSOFAR AS ANIMAL HEALTH IS
CONCERNED; HOWEVER, SUCH PRODUCTS ARE SUBJECT TO GOVERN-
MENT MEAT INSPECTION REQUIREMENTS.
THE MEAT AND POULTRY INSPECTION PROGRAM OF THE U.S.
DEPARTMETNT OF AGRICULTURE ADMINISTERS LAWS AND REGULAT-
IONS GOVERNING INSPECTION REQUIREMENTS FOR ALL FORMS OF
RED MEAT AND POULTRY PRODUCTS INCLUDING CANNED PRODUCTS
BUT EXCLUDING MEAT OF RABBITS, GAME BIRDS AND WILD ANIMALS.
TO MEET THESE REQUIREMENTS A FOREIGN MEAT EXPORTING
COUNTRY MUST:
1} APPLY, THROUGH DIPLOMATIC CHANNELS, FOR OFFICIAL
RECOGNITION OF THEIR SS#YSTEM OF EXPORT MEAT INSPECTION
f}
2} PROVIDE, AT THE TIME OF APPLICATION, COPIES OF
LAWS AND REGULATIONS WHICH WILL GOVERN ACTIVITIES IN THE
PLANTS HANDLING PRODUCT FOR EXPORT
3} AFTER IT HAS BEEN DETERMINED THAT THE APPLIAB
BLE LAWS AND REGULATIONS CORRESPOND TO U.S. STANDARDS,
INVITE A TEAM OF U.S. DEPARTMENT OF AGRICULTURE EXPERTS
TO PERFORM ON-SITE INSPECTION OF THE SYSTEM IN OPERATION.
IF AT THIS POINT THE U.S. DEPARTMENT OF AGRICULTURE'S
FINDINGS ARE FAVORABLE, THE FOREIGN EXPORTING NATION CAN
BE AUTHORIZED TO SHIP MEAT AND/OR POULTRY TO THE UNITED
STATES. IN CONNECTION WITH THE REQUIREMENTS OF THE MEAT
AND POULTRY INSPECTION PROGRAM, U.S. INSPECTORS USUALLY
VISIT "APPROVED" FOREIGN PLANTS FOUR TIMES ANNUALLY.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
I
3
THE MEAT IMPORT ACT OF 1964 REQUIRES THE PRESIDENT TO
LIMIT IMPORTS OF FRESH, CHILLED OR FROE BEEF AND VEAL,
MUTTON AND GOAT MEAT. THE LAW ESTABLISHES A FORMULA,
BASED ON THE RELATIONSHIP BETWEEN IMPORTS AND DOMESTIC
COMMERCIAL PRODUCTION, FOR PROCLAIMING A QUOTA WHEN
ESTIMATED IMPORTS EXCEED TRIGGER LEVELS. WHEN MEAT
IMPORTS APPROACHED THE TRIGGER LEVEL IN 1968, A VOLUNTARY
MEAT EXPORT RESTRAINT PROGRAM WAS ADOPTED WITH THE MAJOR
SUPPLYING COUNTRIES AGREEING TO LIMIT EXPORTS TO THE UNITED
STATES TO SPECIFIC LEVELS TO AVOID THE NEED TO O*IMPOSE
AN IMPORT QUOTA. VOLUNTARY RESTRAINTS ARE STILL IN EFFECT.
PROVISIONS CAN BE MADE FOR NEW SUPPLIERS.
2. RESTRICTION ON IMPORTATION OF CERTAIN KINDS OF FURS.
CURRENT U.S. TARIFF LEGISLATION PROHIBITS IMPORTATION
FROM EITHER CHINA OR THE USSR OF SEVEN KINDS OF SKINS:
ERMINE, FOX, KOLINSKY, MARTEN, MINK, MUSKRAT AND WEASEL,
RAW OR NOT DRESSED OR DRESSED. THE PROHIBITION DOES NOT
APPLY TO GARMENTS MANUFACTURED FROM SUCH SI*KINS.
GP-3 YY
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322{OCR}
SECRET
EA/ACA: CWFREEMAN, JR. : MFC
7/5/72 EXT 22657
EA/ACA: RUSULLIVAN
PRIORITY
PARIS
NODIS/HOMER
RWS
FOR AMBASSADOR ONLY
CWFC
SUBJ: COMMODITIES FOR EXPORT TO THE PRC
COMMODITIES PRODUCED BY THE PRC WHICH APPEAR TO HAVE GOOD
MARKET POSSIBILITIES IN THE US ARE LISTED BELOW.
LIMITATIONS MAY BE PLACED ON SOME OF THESE COMMODITIES
UNDER SUCH RESTRICTIONS AS QUOTAS, ANTI-DUMPING LEGISLATION,
OR FOOD INSPECTION REQUIREMENTS:
FOODSTUFFS {FRESH, FROZEN AND PROCESSED}
TEXTILES
ESSENTIAL OILS
SILK
METALS {TITANIUM, ANTIMONY, ETC.}
ANIMAL HAIR CUOOL, HOG BRISTLES, ETC.} }
CHEMICALS
INDUSTRIAL RAW MATERIALS {TALC, ROSIN, PETROLEUM, ETC.}
HAND TOOLS CHAMMERS, AXES, ETC.} }
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322{0CR}
SECRET
EA/ACA: CWFREEMAN JR. : MFC
7/5/72 EXT 22656
EA/ACA RWSULLIVAN
PRIORITY
PARIS
NODIS/HOMER
RWS
FOR AMBASSADOR ONLY
CWFCAC
SUBJ: COMMODITIES FOR EXPORT TO THE PRC
THE FOLLOWING GENERAL CATEGORIES OF COMMODITIES MADE OR
GROWN IN THE UNITED STATES APPEAR TO OFFER THE BEST POTEN-
TIAL FOR EXPORT TO THE PRC, SUBJECT TO FULL INFORMATION ON
END USE FOR THOSE COMMODITIES REQUIRING VALIDATED LICENSES.
WHEAT AND GRAINS
RUBBER AND RUBBER PRODUCTS, NATURAL AND SYNTHETIC
SYNTHETIC TEXTILES
MOST METALS AND SEMIFABRICATED METAL PRODUCTS
FERTILIZERS
MOST CHEMICALS
PHARMACEUTICAL AND MEDICINAL PRODUCTS
MINING MACHINERY
MOST PETROLEUM EXPLORATION, DRILLING, AND PRODUCTION
EQUIPMENT FOR SHALLOW TO MEDIUM DEPTHS
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
2
TEXTILE MACHINERY
FOOD INDUSTRY MACHINERY, AND OTHER MACHINES TO MANUFACTURE
A WIDE RANGE OF CONSUMER GOODS
ROLLING MILLS, MANY TYPES
REFRIGERATION AND AIR CONDITIONING EQUIPMENT
PLASTICS MANUFACTURING AND FABRICATING EQUIPMENT
MOST INDUSTRIAL PROCESS CONTROL EQUIPMENT
MANY TYPES OF MACHINE TOOLS
AGRICULTURAL MACHINERY
ENGINES, GASOLINE AND DIESEL, MOST TYPES
TELEVISION AND RADIO EQUIPMENT, HOME AND STUDIO TYPES
ELECTRONIC COMPENENTS
ELECTRONIC COMPONENTS, MANY TYPES
ELECTRONIC TEST EQUIPMENT, MANY TYPES
OFFICE EQUIPMENT AND MACHINES
SOME ELECTRONIC COMPUTERS
ELECTRIC GENERATION AND TRANSMISSION EQUIPMENT
EARTH MOVING AND CONSTRUCTION EQUIPMENT
AUTOMOTIVE EQUIPMENT, INCLUDING MOST TRUCKS, CARS, BUSES,
ETC.
RAILWAY EQUIPMENT, FIXES AND ROLLING
CIVIL AIRCRAFT, INCLUDING AVIONICS AND FLIGHT CONTROL
EQUIPMENT ESSENTIAL TO SAFETY
GROUND AVIATION ELECTRONIC EQUIPMENT NEEDED FOR SAFETY,
SEVERAL TYPES
LABORATORY INSTRUMENTS, MANY TYPES
PHYSICAL PROPERTIES TESTING EQUIPMENT, MANY TYPES
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
FORM DS 322A{0CR}
SECRET
I
PL 3
CAMERAS, PROJECTORS AND OPTICAL EQUIPMENT OF MOST
COMMERCIAL TYPES
TECHNOLOGY FOR MANUFACTURING A WIDE VARIETY OF CONSUMER
GOODS AND COOMMON INDUSTRIAL PRODUCTS
GP-3 YY
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
DISTRIBUTION AUTHORIZATION
2463
1. TYPE OF DOCUMENT: Memo for Those Listed Below
2. SUBJECT:
Differential Treatment of the PRC in COCOM List Review
Negotiations
3. DATE:
June 12, 1972
4. CLASSIFICATION: CUNFIDENTIAL
NO. OF
ADDRESSEE
COPIES
RECIPIENT
TIME
DATE
Secretary of State
1
Gall
9:00
6/12
Secretary of Defense
1
1
ne May
Ray Bengen
2130
4/12/12
Secretary of Commerce
10:30
4/13/72
Director, NASA
1
Heleu H.Marebouse
10:45
6/13
Director, CIEP
1
n.L 10:25 6/13/72
Gen. Haig
1
Mr. Odeen
1
Col. Kennedy
1
Mr. Walsh
1
Mr. Holdridge
1
Mr. Hormats
1
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
DISTRIBUTION SHEET
NSC Staff
Dr. Kissinger
Item
Gen. Haig
To
Mr. Hicks
Cdr. Howe
Date
Mr. Janka
Mr. Latimer
Classification
Mr. Lord
Mr. McManis
Mr. Hewitt
Miss Brownell
Mrs. Davis
Mr. Hackett
Mr. Sonnenfeldt
Mr. Wandler
Mr. Hyland
Mr. Clift
Mr. Odeen
Mr. Court
Mr. Holdridge
Lt. Col. Merrit
Mr. Negroponte
Mr. Sachs
Mr. Froebe
Mr. Carter
Mr. Edmundson
Lt. Col. Murphy
Mr. Stearman
Mr. Bushnell
Mr. Solomon
Lt. Cdr. Knubel
VIG
Lt. Power
Mr. Saunders
Col. Kennedy
Mr. Hoskinson
Col. Pinckney
Miss Neaher
Mr. Crocker
Mr. Marshall
Mr. Lehman
Mr. Hormats
Administrative Office
Mr. Wright
Secretariat
Mr. Levine
Mr. Ash
W.H. Files
Mr. Rondon
Mr. Ferguson
Central Files
Mr. Walsh
Mr. Guhin
Vice President(Gen. Dunn)
OMB (J. Frey)
Secretary of State
Secretary of Defense
Director, USIA
Director, OEP
Attorney General
Other Departments and Agencies:
Under Secretary of State
are Commurics
Deputy Secretary of Defense
Chairman, JCS
Dar, NASA A
Director, CIA
Dir, CIEP
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
2463
THE WHITE HOUSE
WASHINGTON
CONFIDENTIAL
June 12, 1972
MEMORANDUM FOR:
The Secretary of State
The Secretary of Defense
The Secretary of Commerce
The Director of the National Aeronautics
and Space Administration
SUBJECT:
Differential Treatment of the PRC in
COCOM List Review Negotiations
The President has considered the memorandum submitted by the
Department of State and your positions on the above subject.
Based on these, he has decided the following:
-
In the review now taking place in COCOM the United States
should adopt as a general principle the termination of differential
treatment for the PRC as the basis for development of the United
States negotiating position. In the event that there are particular
items which we and the other COCOM countries agree should be
treated on a differential ba is, we should endeavor to apply the
concept of the "disguised differential" as described in the memo-
randum submitted by the Department of State.
--
In the event that other COCOM nations agree to the concept of a
"disguised differential" on particular items in COCOM negotiations,
we should attempt to retain a "disguised differential" for the helium
liquefication equipment and containers for the transportation of
liquefied gases. If, however, our holding to this position engenders
a confrontation with other COCOM countries, WC should accept the
removal of these items from the "disguised differential" category.
Henry A. Kissinger
Peter M. Flanigan Many
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
THE white HOUSE
WASHINGTON
CONFIDENTIAL
June 12, 1972
MEMORANDUM FOR:
The Secretary of State
The Secretary of Defense
The Secretary of Commerce
The Director of the National Aeronautics
and Space Administration
SUBJECT:
Differential Treatment of the PRC in
COCOM List Review Negotiations
The President has considered the memorandum submitted by the
Department of State and your positions on the above subject.
Based on these, he has decided the following:
--
In the review now taking place in COCOM the United States
should adopt as a general principle the termination of differential
treatment for the PRC as the basis for development of the United
States negotiating position. In the event that there are particular
items which we and the other COCOM countries agree should be
treated on a differential basis, we should endeavor to apply the
concept of the "disguised differential" as described in the memo-
randum submitted by the Department of State.
In the event that other COCOM nations agree to the concept of a
"disguised differential" on particular items in COCOM negotiations,
we should attempt to retain a "disguised differential" for the helium
liquefication equipment and containers for the transportation of
liquefied gases. If, however, our holding to this position engenders
a confrontation with other COCOM countries, we should accept the
removal of these items from the "disguised differential" category.
Henry A. Kissinger
Peter M. Flanigan
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
MEMORANDUM
50718
THE WHITE HOUSE
2463
CONFIDENTIAL
WASHINGTON
ACTION
June 9, 1972
THE PRESIDENT HAS SEEN
MEMORANDUM FOR:
THE PRESIDENT
FROM:
HENRY A. KISSINGER
PETER M. FLANIGAN
HSmg
SUBJECT:
Differential Treatment of the PRC in
COCOM List Review Negotiations
COCOM the NATO and Japan Committee on strategic trade with
Communist nations -- is presently reviewing items which it restricts
for sale to Communist countries. A major issue is the "China differ-
ential'L- which results in stricter application of COCOM controls on
exports of 30 items to the PRC than to the USSR or Eastern Europe.
The agencies (Tab C) agree in principle that we should reduce the
"differential" as much as possible. However, DOD (Tab D) feels items
should be eliminated on an item-by-item basis and that helium liquification
equipment and containers for transportation of liquefied gases should be
retained for embargo to China alone. Several other COCOM members --
particularly Japan -- plus State (Tab B), Commerce, and NASA, favor
deletion of all "differential" items from the COCOM list, and rejection
of the "China differential" principle.
There are two options:
Option A. Adopt the general principle of termination of differential
treatment for the PRC in COCOM. Pros: Consistent with our equal treat-
ment of the PRC and the USSR on U. S. export controls, benefits our re-
lations with the PRC, and enables us to agree with Japan on an issue
important to her. Cons: Establishes a principle of equality when we
recognize there is a greater likelihood of diversion of certain items to
military uses in the PRC than in the USSR, decreases our flexibility to
agree to a relaxation of controls on items for the USSR and Eastern Europe
because such items would then necessarily have to be decontrolled for China.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
2
Option B. Retain the China "differential" on an item-by-item
basis. However, the differential would not be applied explicitly but
would be disguised by attaching two conditions to the export of hard-
core items: (a) a determination by the exporting government that the
item could not reasonably be used for strategic purposes, and (b) a
certification by the importing country that the item would be used for
peaceful purposes. Although these conditions would not apply only
to the PRC, its inability to comply would mean that these few items
could not be exported by COCOM members to the PRC. (Pros and Cons
are the reverse of those under Option A.)
On balance, I recommend Option A -- push for removal of the "China
differential" as a matter of general principle. If, however, there are
a few items on which we and the other COCOM countries agree require
retention of a "differential" this should be done in the form of a "disguised
differential". In the latter case, other nations' support for retaining the
"differential" would absolve us of total responsibility for its maintenance.
And, the real effect of the "differential" on the PRC is not significant.
RECOMMENDATION:
That you approve Option A (eliminating as a general principle differ-
ential treatment in the COCOM for the PRC while attempting to apply a
"disguised differential" to those few items which we and other COCOM
members agree should be treated on a differential basis. We would
attempt to retain gas transportation equipment and helium separators on
the China "differential" list as DOD proposes, but would not hold to this
position at the risk W ofla\ confrontation with other COCOM countries).
Approve
Disapprove, prefer Option B (deal with the differential on an
item-by-item basis while attempting to place such a "disguised
differential" on these items including the gas transportation
equipment and helium separators on which we believe a differ-
ential should be maintained)
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
MEMORANDUM
NATIONA SECURITY COUNCIL
CONFIDENTIAL
2463
May 8, 1972
MEMORANDUM FOR:
DR. KISSINGER
FROM:
JOHN HOLDRIDGE
3007
ROBERT HORMATS RM
SUBJECT:
Differential Treatment of the PRC in COCOM
List Review Negotiations
COCOM--the international (NATO and Japan) Committee on strategic
trade with Communist nations is presently reviewing items which it
restricts for sale to Communist countries. An interagency paper (Tab C)
asks for a Presidential decision on our position in that review. Japan
has repeatedly urged that COCOM eliminate the "China differential"--
which results in stricter application of COCOM controls on exports to the
PRC than on exports to the USSR or Eastern Europe. During the first
phase of the present review 15 of the 45 "differential" items have been
removed entirely from COCOM control or from "China differential" status.
There is agreement in principle among the agencies that (Tab we should reduce
the "differential" as much as possible. However, DOD/feels items should
be eliminated on an item-by-item basis, and argues that there are two
items which should be retained for embargo to China alone helium liqui-
dation equipment and containers for transportation of liquified gases.
Several other COCOM members--with Japan in the forefront- plus State
(Tab B), Commerce, and NASA, favor deletion of all "differential" items
from the COCOM list, and rejection of the principle of the "China differ-
ential".
There are two options:
Option A: Adopt the general principle of termination of differential treat-
ment for the PRC in the COCOM.
Option B: Deal with the "China differential" on an item-by-item basis,
with a view toward retention of a small number of "hard-core" items for
embargo to China alone.
The pros and cons of each option are set forth in the proposed memorandum
to the President.
On balance, we recommend that the President approve Option A. Peter
Flanigan concurs. This would put us in the position of advocating equal
CONFIDENTIAL Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
2
treatment for the USSR and the PRC in COCOM and remove another barrier
to trade with the PRC. If, however, there are items on which we and the
other COCOM countries agree require retention of a "differential", this
should be done in the form of a "disguised differential".
There are in addition two suboptions:
To retain through a "disguised differential" the two items which
Defense wishes to have included on the COCOM list for embargo to the
PRC alone -helium liquification equipment and liquified gas containers
(sub-option 1), or
--
To remove these items from the embargoed list (sub-option 2).
Arguments in favor of Sub-option 2 are that these items can be purchased
by the PRC from USSR and Eastern Europe (to which they are not embar-
goed under COCOM), and that other COCOM nations believe that the rationale
for restricting their export to the PRC--on the grounds that they contribute
to China's rocket technology-- is weak. However, DOD--which favors Sub-
option 1--argues that while the items may be available in Eastern Europe,
the amounts in which they would be available to the PRC are not adequate,
it is incorrect to assume such specialized items would be made easily
available by these countries to the PRC, and that Japan might not object
strenuously to the retention of controls on these items if most other "differ-
ential" items are decontrolled.
We recommend that the President approve Sub-option 1. These items-
if any "differential" is to be retained--ar logical candidates for inclusion
under it. However, because our case for retention of these items on the
embargo list is weak and our holding out for including them on such might
cause friction in our relations with our COCOM countries and thereby make
cooperation with them in other aspects of the COCOM negotiations more
difficult, we recommend that the US not hold to this position if it means an
open confrontation with other COCOM countries.
RECOMMENDATION:
That you sign the memo for the President at Tab I.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
720 5047
NSC 720 2463
THE SECRETARY OF STATE
WASHINGTON
CONFIDENTIAL
March 20, 1972
MEMORANDUM FOR THE PRESIDENT
Subject: Differential Treatment of the PRC
in COCOM List Review Negotiations
The Department of State has conveyed to the National
Security Council a memorandum (attached) describing the
nature of the PRC/COCOM problem, the options which are
available at this point, and the advantages and disad-
vantages thereof as we see them.
My view is that the preferred course of action would
be to eliminate as a matter of principle any differential
treatment for the People's Republic of China under the
Coordinating Committee (COCOM) strategic trade control
arrangements and to manage our negotiations during the
remainder of the current COCOM List Review accordingly.
My reasons are threefold:
1) I believe ultimately any form of discrimination
in COCOM against the People's Republic of China
will be politically unacceptable to Japan.
2) China cannot effectively be prevented from ob-
taining the so-called China differential items
directly or indirectly through Eastern Europe
or the non-COCOM European countries.
3) Finally, for us to insist on discrimination
against the People's Republic of China in COCOM
is now inconsistent with our own equal treatment
of the People's Republic of China and the USSR.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
-2-
Under these circumstances, we would have more
to gain in our relations with Japan by removing the
China differential issue from the COCOM negotiation
than we would be likely to forfeit in slightly dimin-
ished trade controls toward the People's Republic of
China.
William P. Rogers
Attachment:
Eliot-Kissinger Memorandum.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
7204390
02463
department OF STATE
Washington, D.C. 20520
CONFIDENTIAL
March 20, 1972
MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: Differential Treatment of the PRC
in COCOM List Review Negotiations
The Government of Japan has repeatedly urged
that we accept the elimination of the discrimina-
tory China COCOM differential which results in
stricter application of COCOM controls on some 45
items against the People's Republic of China than
against the USSR or Eastern Europe. We have indi-
cated general agreement with the Japanese viewpoint,
but have urged that the problem be worked out during
the COCOM List Review, now underway in Paris, on an
item-by-item basis.
The so-called China differential dates from the
last COCOM List Review in 1968/69. It was based on
the assumption that the PRC was more likely to use
COCOM-listed equipment for military purposes than
for civilian purposes since the civilian economy of
China is less developed than that of the USSR or
Eastern Europe. The device of retaining embargoed
items for control to the PRC while liberalizing
their treatment to the Soviet Union and Eastern
Europe made it possible to liberalize trade with
Eastern Europe without making premature decisions
on the treatment of China. Since Japan was sensi-
tive about this approach in 1968/69, it was
necessary to work out an indirect formula to avoid
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
2.
an overt difference in the list. This was accom-
plished through a formula that did not mention China
but provided for automatic COCOM clearance at the
end of an 18-day waiting period for certain items
to areas "capable of producing similar items or
having easy access to such items" -- the areas
understood to be the USSR and Eastern Europe
except Albania. The Japanese felt so strongly on
the differential issue that they reserved on and
never accepted proposed differential treatment for
about twelve items in the 1968/69 COCOM review.
There were approximately 45 China differential
items to be dealt with at the beginning of the
present COCOM List Review. In the first round of
the List Review, agreement was reached on the
disposition of 15 of these. It has been our hope
that in the second round, now in progress, we might
be able to reduce the number of differential items
to the point where there would be only a few left
on which we could achieve our purpose through a
"disguised differential" that would establish end-
use conditions the Chinese would be unlikely to
meet. The conditions we have proposed are: 1) the
exporting government's determination by inspection
that the item cannot reasonably be used for strategic
purposes, and 2) assurances of peaceful use in writ-
ing by competent authorities of the importing country.
If the Japanese can accept this formula on a
number of items we believe the COCOM negotiation can
succeed. On this basis, we see our way clear to
resolving almost all of the 15 differential items
remaining in the second round of the COCOM negotiation.
There are only two items on which there are
serious interdepartmental differences: helium
separation equipment and containers for transporta-
tion of liquified gases (nitrogen, oxygen, and argon
only) both of which are proposed for deletion by
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
3.
other COCOM members. State, Commerce and NASA
recommend deletion of these items from the COCOM
list while Defense recommends retention for embargo
to China alone. We are told that Secretary Laird
would appeal an overriding decision by State to
delete these items. A description and discussion
of these items is attached.
In this Department's view, an attempt by the
U.S. to insist on retaining these two items when
the justification is very weak would risk pushing
the Japanese back to an intransigent position at
a point in the COCOM negotiations when the prospects
for a satisfactory outcome seem promising.
For this reason, we believe it is timely to face
the major point of principle on the China differen-
tial issue which the Japanese have repeatedly urged --
namely, whether it is in our interest to maintain
the China differential at all. Since the COCOM
negotiation is complex and tightly scheduled in
terms of discussions of items, we should be prepared
in advance with enough flexibility to deal with the
differential issue promptly if it turns out that a
collision with the Japanese is imminent. Moreover,
if we can resolve the differential issue to the
satisfaction of the Japanese and without damage to
our own objectives in COCOM, it may benefit our
efforts on some of the major non-differential
questions in COCOM.
It is clear that none of the executive
departments proposes retention in principle of
the present China differential. The alternatives
at this stage as we see them are as follows:
1. Continue to deal with the China differential
as we have been on an item-by-item basis
with a view to arriving at a small number
of hard-core items that are treated under
"disguised differential" conditions.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
4.
Under this option there are two sub-
options:
a.
Delete the two items at issue.
b. Insist on retaining differential
control of the two items.
2. Adopt as a principle the termination of
differential treatment for the PRC as the
basis for development of U.S. negotiating
positions.
This option would assume the deletion of
the two items at issue.
The advantages and disadvantages of each of these
options may be briefly summarized as follows:
1. Continue to deal with the China differential
as we have been on an item-by-item basis
with a view to arriving at a small number
of hard-core items that are treated under
"disguised differential" conditions.
Advantages
1. The "disguised differential" is an effective
means of accomplishing indirectly what was
accomplished more directly through the "easy
access" China differential notes.
2. It is important to continue tighter control
over certain items for the PRC than for
Eastern Europe and the USSR because of the
less advanced character of Chinese industrial
development and the relatively greater proba-
bility of military use.
3. Preserving the principle of less favorable
treatment for the PRC is necessary to protect
our future position in COCOM when there may be
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
5.
pressures for further reducing controls
for the USSR and Eastern Europe to an
extent that would be unacceptable in the
case of the PRC.
4. The "disguised differential" formula has
advantage in itself in prescribing condi-
tions for exceptions to Eastern Europe and
the USSR, and would also permit exceptions
for the PRC at such time as it is prepared
to meet the conditions.
Disadvantages
1. The "disguised differential" still represents
a differential in fact, and as such is incon-
sistent with U.S. policy on U.S. export
controls of treating the USSR and the PRC
equally.
2. It is likely that the Japanese in the end will
reject the formula.
3. The PRC cannot be prevented from obtaining
China differential items either from Eastern
Europe or from the major non-COCOM European
neutral countries.
4. Since the indirect differential is likely to
apply to a small number of items, it operates
in effect as a negotiating device that favors
the Western Europeans' efforts to relax
controls toward the Warsaw Pact countries.
Sub-options
l.a. Delete the two items at issue.
1.b. Insist on retaining differential control
of the two items.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
6.
The considerations on these sub-options are
detailed in the attachment but may be summarized
here as advantages and disadvantages of deletion.
Advantages
1. Neither item qualifies under established
COCOM standards for embargo to the USSR
and Eastern Europe -- i.e. those areas
have indigenous production and the items
have civil as well as military uses.
2.
Both items are obtainable by the PRC from
the USSR and Eastern European area.
3.
Deletion would eliminate two items where
the China differential discrimination
would be the most overt.
Disadvantages
1. While the items may be available in the
European communist countries and may be
used for a variety of civil purposes,
their availability in the PRC is not
adequate and their use there is most
likely to be military and strategic.
Both helium and the special containers
have their most significant use in missiles
and rockets.
2.
There is not such extensive commerce between
the Warsaw Pact countries and the PRC as to
justify the assumption that such specialized
items as these would be made easily avail-
able. There would be time and cost factors
involved that would affect free availability
in Western non-COCOM countries.
3.
Since alternative "disguised differential"
or other disposition of most China differen-
tial items seems likely, the retention of
control in these two cases might well be
acceptable to Japan and the other COCOM
countries affected.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
7.
2. Adopt as a principle the termination of
differential treatment for the PRC as the
basis for development of U.S. negotiating
positions.
Advantages
1. This would enable us to agree with the
Japanese on an issue that is obviously
very important to Japan.
2. It would be consistent with our own equal
treatment of the PRC and the USSR on U.S.
export controls.
3. Since there are so few differential items
likely to remain, it is not credible either
that they could be denied to the PRC via
Eastern European or Western non-COCOM
countries, or that their denial could have
a significant impact on Chinese military
capability.
Disadvantages
1. It would limit our flexibility to agree to
warranted relaxation for the USSR and
Eastern Europe and might aggravate our
COCOM negotiating problems with the
European members.
2. Our own actions in reducing U.S. controls
recognized that the COCOM strategic controls
were a separate issue. Moreover, while the
pattern of U.S. regulations on trade with
the PRC and the USSR is essentially the same,
there will continue to be a differential in
practice. The treatment of individual U.S.
export licensing cases will differ and will
be based on different circumstances in the
two countries.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
8.
3.
Since we believe that there is a genuine
basis for differential control because of
the greater likelihood of diversion to
military uses in the PRC, we should not
abandon the principle that differential
treatment, in one form or another, is
required in certain cases.
The Secretary will send the President separately
his recommendation on this matter.
Theodore L. Eliot
Theodore L. Eliot, Jr.
Executive Secretary
Attachment :
Defense Appeal on Two COCOM Cryogenic Items.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
Defense Appeal on Two COCOM Cryogenic Items
Defense has appealed the State proposal supported by
Commerce and NASA for deletion of the following two
items from the COCOM list:
IL-1110 - Gas Liquifying Equipment
Sub-item at issue - ( (d) (1) only)
" (d) (1) Equipment for the separation of
helium from natural gases, and
(d) (2) Equipment for the production of
liquid helium except equipment
which has a capacity of no more
than 20 liters per hour. "
COCOM Proposals -
U.K.
-Delete both (d) (1) and (d) (2) :
all in favor on (d) (1) except
U.S.
Germany -Raise (d) (2) to 50 liters per
hour for piston expansion equip-
ment: State, Commerce, NASA
position supports.
IL-1145 - Containers for the storage or
transportation of Liquified Gases
Sub-item at issue -
" (c) (2) (ii)
Mobile equipment having a
capacity exceeding 1200 gallons
(4,542 Liters) and an evapora-
tion loss rate of less than 1.5%
per day as determined at an
ambient temperature of 75°F
(24°C) and without exposure to
direct sunlight."
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
2.
(This item is embargoed only for China and
applies to specially designed containers
only for liquid nitrogen, oxygen and argon.)
COCOM Proposals -
Japan -Delete this sub-item and the China
differential "easy access" Notes 1
and 2.
U.K. -Reduce the whole item to:
"Containers, jacketed only,
specially designed for the
storage and transportation
of liquid fluorine."
The considerations involved in each of these cases are
as follows:
IL-1110 - Gas Liquifying Equipment
1) Helium is included neither in the COCOM list
nor in the U.S. strategic list, and is widely
available.
2) The U.S. provided a helium separation plant
to the USSR under lend-lease in 1946. The
British estimate, which we do not question,
is that the Soviets began separating helium
from natural gas in 1934 and liquifying it
in 1935. Czechoslovakia manufactures
separation and liquifaction equipment based
on a copied U.S. process.
3) With respect to China the CIA says "China
has made inquiries in the free world about
purchasing helium separation/liquifaction
equipment, and CIA believes that the PRC
has acquired limited quantities of this
equipment. CIA also believes that one
helium separation/liquifaction facility is
located in Szechwan. " Since Czechoslovakia
continues to trade with the PRC it is reason-
able to assume that such equipment might be
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
3.
obtained from that source or indeed from the
USSR which continues to trade with the PRC
on a limited scale.
4) The PRC has sufficient stores of natural gas
to make the extraction of helium and its
liquifaction economically feasible.
5) Liquid helium is used in the U.S. for purging
and pressurizing liquid hydrogen fuel missiles;
the Chinese employ oxygen rather than hydrogen
for their missiles. Additionally, the use of
helium for simulating space environments would
not be involved since the PRC does not have a
space program. Other uses of helium for such
applications as creating high vacuums for
advanced semi-conductor production would not
seem likely to strain their own production
capabilities.
6) The heart of the disagreement by Defense is
their view that we cannot be certain from
the evidence available that the PRC has
"adequate" quantities and regular sources
of helium for their strategic needs.
7) The retention of embargo to the PRC would
either create a new China differential item
(which is politically unacceptable to the
Japanese) or require us to justify the
continued embargo to the Communist area as
a whole in the absence of a supportable case
for retaining the embargo for the USSR and
Eastern Europe.
IL-1145 - Containers for transportation of
Liquified Gases
1) Cryogenic containers for liquid oxygen do
not involve the more advanced technology
necessary for handling liquid hydrogen.
The DIA says "The Chinese have a missile
that is believed to use liquid oxygen,
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
4.
indicating the probable existence of
liquid oxygen storage containers. How-
ever, nothing is known of the level of
the technology in this area. It is
suspected that this is about the same
as the Soviet technology of 1960, i.e.
with loss rates of 5 to 10% per day. II
It is reasonable to assume, however,
that China might have access to trucks
manufactured in Czechoslovakia or the
USSR.
2) The PRC would also have alternatives to
the use of the embargoed trucks in
question: a) use of trucks under 1,200
gallons which are not embargoed; b)
mounting stationary tanks (not embargoed)
on flatbed trucks or trailers; c) locat-
ing small liquid oxygen plants (up to 50
tons per day, not embargoed) near missile
sites to reduce to an acceptable level
the evaporation loss rate involved in
longer range trucking.
3) Defense considers that the Chinese supply
of trucks appears inadequate to fuel an
expanded number of missiles, and that
there is not evidence of Chinese ability
to manufacture trucks for transporting
liquid oxygen at low loss rates.
4) To follow the Defense proposal would require
the U.S. to insist on the continuation of a
China differential item on grounds which are
weak in logical terms, however imperfect our
direct knowledge of Chinese production
capabilities may be.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
3973
THE SECRETARY OF DEFENSE
WASHINGTON. D.C. 20301
9 MAY 1972
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Differential Treatment of the PRC in COCOM List Review
Negotiations
In a separate memorandum the Department of State has proposed to you
that the US eliminate as a matter of principle any differential treat-
ment for the People's Republic of China under the Coordinating Committee
(COCOM) strategic trade control arrangements and that we manage our
negotiations during the current COCOM List Review accordingly.
I cannot concur in this proposal nor in the reasoning on which it is
based. All COCOM member countries recognize the validity of and need for
continuance on strategic grounds of such a differential, although the
Japanese, for diplomatic and domestic political reasons, find living with
this arrangement difficult. These Japanese sensitivities were catered to
in the last COCOM List Review by disguising the differential. This was
achieved by devising certain key words to identify items releasable to
the USSR but not the PRC. Supposed to be kept secret, this formula
nevertheless has become known and the Japanese claim they cannot any
longer accept it.
One solution would be to eliminate all such identifications and achieve
a differential by approving exports to the USSR and Eastern Europe as
exceptions on a case-by-case basis. What blocks this solution is the
adamant position of the UK against any apparent "roll back" of embargo
levels.
Whatever may be the ultimate case, the Japanese are today accepting forms
of discrimination in COCOM against the PRC, and it is by no means yet
clear that they will not accept a continued China differential. In any
event, the essential requirement of an effective system of security trade
controls is that it take account of difference between countries as well
as commodities -- in short, that it be as discriminating as possible.
GROUP 4
Downgraded at 3 year intervals;
CONFIDENTIAL
2216
Declassified after 12 years.
Sec Def Cont Nr. X-
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document 5200 has 10 been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
CONFIDENTIAL
2
As to the question of whether China can be effectively prevented from
obtaining strategic items, the differential does have this effect since
it duly considers (1) the limitations of PRC capabilities, (2) the
non-availability of differential items in non-COCOM countries and
(3) the restrictions which the USSR and the Eastern European communist
countries place upon this type of trade with the PRC.
To continue the differential would be consistent with our present policies.
Nominally, we now give "equal treatment" to the PRC and the USSR in
strategic trade matters, but such treatment still affords us ample oppor-
tunity to consider on a case-by-case basis the differences in capabilities
between these two countries, the degree to which we have assurances as to
peaceful end-use of embargoed commodities and the consequent strategic
impact of approving an export to one or the other. In contrast, the
elimination of the differential in COCOM would not only remove the end-
use and end-user requirements for such shipments but also remove the
commodities themselves from COCOM control. By way of illustration, a
number of advanced computers now specifically embargoed to the PRC but
not to Eastern Europe would automatically be released.
On the basis of the above considerations, I strongly recommend that you
support continued differential treatment for the PRC in COCOM and the
management of our negotiations during the remainder of the List Review
accordingly.
CONFIDENTIAL
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
DOC
RECD
LOG NBR
INITIAL ACTION OFF
MO DA
MO DA HR
NSC CORRESPONDENCE PROFILE
3
20
3
20
17
02463
LOG IN/OUT ONLY
TO: PRES
FROM: ELIOT x
U
NO FORN
NODIS
X
KISSINGER
ROGERS, W
LOU
BUO
EXDIS
DOC SOURCE/CLASS/DESCRIPTION
HAIG
LAIRD, M
C X
EYES ONLY
LIMDIS
S
CODE WORD
RES DATA
TS
SENSITIVE
SUBJECT: Differential treatment of the PRC in NCOCOM list review negotiations
REFERENCE: S/S 7204390 OTHER
NOT XEROXED
APP'TS:
PRES
HAK
TALKER
MEMCON
DATE REQ.
INTERNAL ROUTING AND DISTRIBUTION
ACTION REQUIRED
ACTION
INFO
REC
MEMO FOR HAK
(
)
CY
ADVANCE CYS TO HAK/HAIG
FOR
MEMO FOR PRES.
(
)
STAFF SECRETARY
REPLY for
SIGNATURE
1
)
FAR EAST
FOR DISTRIBUTION/DISPATCH
(
)
SECRETARIAT DISTRIBUTION/ACTION
SUB-SAHARAN AFRICA
MEMO
TO
(
)
NR EAST/NORTH AFRICA
RECOMMENDATIONS
(
)
EUROPE/CANADA
JOINT MEMO
(
)
LATIN AMERICA
REFER TO STATE
(
,
UNITED NATIONS
ANY ACTION NECESSARY
(
)
ECONOMIC
x
CONCURRENCE
(
1
SCIENTIFIC
DUE DATE:
LR PLANNING
COMMENTS: (Including Special 3/27 Instructions)
PROGRAM ANALYSIS
NSC PLANNING
CONGRESSIONAL
DATE
5/11
FROM
TO
S
Jossed ACTION REQUIRE by 3973
CY TO
INTERNAL/INTERIM ROUTING
5/11
Hall
x
Pres In decision Sign seps to agence (5/13)
5/15
Howe
Wardle
Junther actual
JUN 5/10 09 1972
12AM
X P Pres Decision Signess
(5/15)
Pub
6/12
Drp anmoal u com
6/12 CROSS REF WITH
7Amo Sgl HAK/PMF
MICROFILM DATA
NOTIFY
DATE
Joh
SEE LOG
DISPATCH: LETTER/MEMO
DO
DISPOSITION
JOINED BY LOG
COPIES: (AS MARKED ABOVE)
JUN 15 1972 INIT DATE
SPECIAL FILE ROMT:
SA,
HP,
HM
ORIG)
NSC
SPECIAL DISPOSITION COMMENTS:
TO
)
PAF
WHC
SUSPENSE CY ATTACHED:
YES
NO
SUBF
* GPO: 19/2-455-927
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
17
I sent the rest of this package to you
yesterday for dispatch. Please file
this page with it.
Kathy
Reproduced at the Richard Nixon Presidential Library
IED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be
-
MEMORANDUM
THE WHITE HOUSE
3556
WASHINGTON
SECRET/NODIS/HOMER
June 9, 1972
MEMORANDUM FOR:
GENERAL HAIG
FROM:
JON HOWE
SUBJECT:
China Trade NSDM
Attached at Tab A is the joint NSDM and CIEPDM which HAK
recently signed and asked that you "get out ASAP" (copy of full
memo at Tab B). It was learned late today that the CIEP
concurs providing certain changes are made in the due dates
for two reports requested by the NSDM/CIEPDM. Although
there is a remote possibility that HAK wanted to have a rapid
response, it is more likely that he simply overlooked the need
to change the date. The memo was submitted on May 10, 1972
and it requests certain memoranda be submitted to the President
by June 10 (obviously OBE at this point) and on June 16. CIEP
has suggested slipping these dates to June 23 and July 3 respectively.
I concur.
If you agree, these changes will be made and the instruction
gotten out to the bureaucracy immediately. Presumably HAK
has considered all aspects of this instruction including the fact
that the Chinese would shortly in Paris be given a long memoranda
concerning the subject of trade. The implementing cable apparently
is already in the clearance process although the Chinese Ambassador
in Paris has not yet returned. Presumably HAK does not want to
"save" this "news", but I thought you would want to consider again
this aspect.
Attachments
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
THE WHITE HOUSE
WASHINGTON
SECRET/NODIS/HOMER
June 10, 1972
National Security Decision Memorandum 170
Council on International Economic Policy Decision Memorandum 7
TO:
The Secretary of State
The Secretary of Treasury
The Secretary of Defense
The Secretary of Agriculture
The Secretary of Commerce
The Director of Central Intelligence
SUBJECT:
US-PRC Trade
The President has reviewed the memorandum submitted by the
Department of State, with the Department of Commerce, on April 24
and the response to NSSM 149 submitted by the A Hoc Group on
March 24 on the above subject. Based on these, he has approved
the recommendations for actions over the next three months contained
in the April 24 memorandum for proceeding to implement the statement
on trade in the Shanghai communique with the following mo lifications:
The memorandum for Ambassad or Huang shoul dicate that
we recognize the PRC's interest in MFN but view this as a
subject for later discussion.
The matter of allege PRC failure to repay Export-Import
Bank lebt should not be raised with the PRC at this time. An
interagency committee chaired by Treasury should examine
this question and its effect on PRC eligibility for Export-
Import Bank financing, and submit a report to the President
by July 3.
The memorandum for Ambassador Huang should place greater
stress on the necessity of beginning discussions in the near
future on the settlement of the claims issue.
References to the cotton textile issue and to US anti lumping
regulations and US prohibitions on imports of "certain endan-
gered animal species" should be removed from the memorandum
Reproduced at the Richard Nixon Presidential Library
reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
2
for Ambassador Huang. These matters should be dealt with
in separate memoranda to be presented to Ambassador Huang
within the next several weeks. In his oral presentation,
Ambassador Watson should indicate that we intend to provide
the PRC with such memoranda shortly. Memoranda on these
subjects together with recommendations as to the timing of
their presentation should be submitted to the President by
June 23.
No mention should be made to the PRC at this time of possible
US changes in transportation regulations. The Department of
State, in cooperation with other appropriate agencies, should
submit to the President as soon as possible documents necessary
to revise US regulations regarding reciprocal visits by ships and
aircraft. A draft statement announcing such decisions as well
as a statement indicating that eventual establishment of scheduled
air services would be subject to US-PRC inter-Governmental
discussions should also be submitted.
As to recommendations for longer term steps, the President has deferred
his decision and requests that they be resubmitted with proposed memo-
randa, where appropriate, and specific recommendations as to timing.
1
A.
Henry A. Kissinger
PM
Peter M. Flanigan
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
NIXON PRESIDENTIAL MATERIALS PROJECT
DOCUMENT CONTROL RECORD
ITEM REMOVED FROM THIS FILE FOLDER
A RESTRICTED DOCUMENT OR CASE FILE HAS BEEN REMOVED FROM
THIS FILE FOLDER. FOR A DESCRIPTION OF THE ITEM REMOVED
AND THE REASON FOR ITS REMOVAL, CONSULT DOCUMENT ENTRY
NUMBER /
ON EITHER THE DOCUMENT WITHDRAWAL RECORD
(GSA FORM 7292 OR NA FORM 1421) OR NARA WITHDRAWAL SHEET
(GSA FORM 7122) LOCATED IN THE FRONT OF THIS FILE FOLDER.
A sanitized copy substituted for an original item which
Contains information restricted under the Privacy Act.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NLN FORM 101 (revised 6-85)
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
1. TYPE OF DOCUMENT:
MEMO for RECIPIENTS of NSDM 170/CIEPDM 7
2. SUBJECT: CHANGE OF DATE
3. DATE: JUNE 14, 1972
4. CLASSIFICATION: SECRET/NODIS/HOM
NO. OF
ADDRESSEE
COPIES
RECIPIENT
TIME
DATE
12
The Vice President
1
Deharah Hutton 9:53 6/15/3
The Sec. of State
1
The Sec. of DOD
1
The Under Sec. of State
1
Deputy Sec. of DOD
1
Director, CIA
1
The Sec. of Treasury
1
The Sec. of Agriculture
1
The Sec. of Commerce
1
Mr. Flanigan
1
10,00 6/15/22
Gen. Haig
1
Mr. Kennedy
1
Mr. Holdridge
1
Mr. Hormats
1
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
2
2. Product Lists and Approval of Export Licenses
Advise the Chinese that we will consider favorably
license applications for a broad range of products
clearly intended for peaceful end uses. In this connec-
tion, present the P.R.C. with a list of U.S. export
products, including aircraft, and a list of Chinese
export products that appear to offer the best potential
in U.S.-P.R.C. trade. The U.S. export list would be
developed on the basis of those products the P.R.C. is
now importing from other economically advanced countries,
in which we are generally competitive and which we are
prepared to license for export to China. The list of
Chinese exports would be based on what the Chinese are
now successfully exporting to economically advanced
countries and for which there is a market in the United
States. The list of U.S. exports is attached. (The
import list is now being prepared by Commerce.) Invite
the Chinese to comment on these lists and to suggest
additional items. Offer to provide commercial informa-
tion (economic data, market information, trade regula-
tions, etc.) and ask whether they would be willing to
provide similar information in return (Option 27,
pp. 25-26, 36 in NSSM-149).
3. Amend Transportation Order T-2
a. Department of Commerce believes that,
providing it is appropriate, given the context of our
over-all strategy relative to China, we should amend
T-2 to allow reciprocal port visits by U.S. and P.R.C.
vessels, thus effectively according China the same
treatment we presently grant the U.S.S.R., and advise
the Chinese of this change (Option 20, pp. 38-39 in
NSSM-149). State Department believes that this action
should be taken now. N.B.: Requires Presidential action.
4. Presentation of a Memorandum Outlining
"Possible Topics for Future Discussion",
as Follows:
a. Settlement of Private Claims. The Memorandum
should note that Foreign Minister Chi P'eng-fei agreed
in an informal discussion with Secretary Rogers that the
problem of private claims is one that can be discussed
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
MEMORANDUM
NATIONAL SECURITY HAVE COUNCIL
HAY6
Hold fro
May 10, HAK 1972
3556
ACTION
SECRET/NODIS/HOMER
SUBJECT
MEMORANDUM Rush FOR: HENRY A. KISSINGER
Al-Getaul
FROM:
JOHN HOLDRIDGE
30ml
ROBERT HORMATS
ASAP
Implementation of NSSM 149 - China Trade
As you requested at the March 31 SRG meeting, State and Commerce have
prepared recommendations for an "Action Program" for implementing
NSSM 149 on trade with the PRC. Also attached are proposed negotiating
instructions to be sent to Ambassador Watson and a draft memorandum to
be given to Ambassador Huang. (Attachments are at Tabs B, C, D respectively.)
The major problem with this paper is that on balance the tone of our pre-
sentation to the Chinese is negative. Although the paper recommends a
number of means of facilitating trade, it also calls for our informing the
PRC--primarily in the memorandum for Ambassador Huang- of the myriad
of regulations and laws with which they will have to comply in order to
trade with us. While we agree that certain of our restrictions and legal
constraints should be brought to the attention of the PRC at this time, we
should not overwhelm them. The question of settlement of private claims
should certainly receive high priority, and it is also advisable to inform
the Chinese in the near future of our textile problem; however, it is not
necessary at this time to raise the question of debts allegedly owed by
China to the Ex-Im Bank, our restrictions on the prohibition of endangered
animal species, antidumping regulations, etc.
The paper's recommendations are divided into: I. Actions--both unilateral
and with respect to the PRC--which we should take within the next three
months; II. Actions which should be taken three-six months from now;
III. Actions which should be taken six-twelve months from now; IV. Those
actions which can be taken at any time.
I.a. Actions which should be taken with respect to the PRC within the next
three months:
Notify the PRC that we are in the process of forming a private Sino-
American Trade Council (SATC) which will act as a central clearing house
for information and research on PRC trading practices for U.S. businessmen.
-- Advise the PRC of the range of products which we will consider favor-
ably for export license applications. Prepare a list of goods which China
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
2
might export to the U.S. Invite the Chinese to comment on these lists and
suggest additional items. Offer to provide trade information to the PRC
and ask whether the PRC would also be willing to provide information touus.
Amend transportation order T-2 to allow reciprocal port visits by
U.S. and PRC vessels, thus according China the same treatment presently
accorded the USSR. (This requires Presidential action.)
Present the PRC a memorandum outlining possible topics for future
discussion including:
- the settlement of private claims, which is becoming increasingly
important now that direct trade is increasing,
- scheduled air services between China and the U.S.,
- U.S. import restrictions on textiles,
- explanation of U.S. restrictions and criteria for determining
market disruption and dumping, and the procedures for handling
these problems, and offer to provide a more detailed explanation,
- industrial property protection issues.
Within this category there are two issues on which State and Commerce
differ:
Most-favored-nation treatment for PRC
The PRC (Foreign Minister Chi) raised this matter in Peking. State wishes
to take cognizance of the PRC interests in MFN and offer to negotiate a
bilateral agreement which would lead to seeking legislation to grant MFN
status to the PRC. Pros: Responsive to PRC inquiries on MFN, positive
element in developing trade relations, positive incentive for PRC to settle
private claims issue. Cons: Might make us appear to be over anxious,
legislative reception is uncertain, and we have not moved this far with the
Russians who have been more insistent on this and are a more important
trading partner.
Commerce recommends that we make no mention of MFN in the memoran-
dum to be given to Ambassador Huang but instruct our Ambassador to reply,
if asked, that MFN should be a subject for later discussions after major
initial issues, such as claims, are resolved. Pros: Avoids appearance
of over eagerness, holds a major sweetener in reserve. Cons: Not
responsive to PRC inquiry, and would leave the memorandum to Huang
largely negative in tone.
SECRET/NODIS/HOMR at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
3
We believe neither option to be satisfactory. It is premature to begin
negotiations on MFN with the PRC without doing so with the Soviets. We
do not even have MFN with Romania, and it appears that Congress is
reluctant to move on our request for that. On the other hand, to say
nothing would make it appear as if we were ignoring Foreign Minister Chi's
inquiry. We recommend, therefore, that you approve including in the memo-
randum to the PRC that we view MFN as a subject for later discussions.
(We believe that we should not portray settlement of the claims issue as a
quid for which we owe China a quo such as MFN. The settlement of the
claims problem should be portrayed as being of mutual benefit, as it is.)
Settlement of Export-Import Bank debt
The Ex- Im Bank asserts certain claims against the PRC deriving from ship-
ments of U.S. goods to China before the PRC was established in October
1949. It holds that until payments are made it cannot finance trade with the
PRC. Commerce recommends that, if a policy determination is made that
the debts presently ascribed by the Ex-Im Bank to the PRC are proper claims
against the PRC, this issue should be inscribed in the memorandum to be
passed to Ambassador Huang as one of the subjects for future discussion.
Pros: Would permit early resolution of issues and determination whether
Ex- Bank financing would be available for U.S. - PRC trade. Cons: Raises
an issue which is of no current interest to the PRC since it does not seek
foreign financing at present, and could introduce as contentious issues other
USG claims and PRC counter claims.
State recommends that this matter not be raised now, but that the effect of
the alleged PRC failure to repay Ex-Im debt on PRC eligibility for Ex-Im
Bank financing be considered by the National Advisory Council (NAC).
Pros: Would result in a coordinated interagency determination on whether
or not the PRC is eligible for Ex-Im financing, and permits a considered
position on the total USG claims against the PRC. Cons: Runs the risk
of bringing a wide variety of agencies into the decision-making process on
what could be a sensitive matter important to our economic relations with
the PRC.
We recommend that we not raise this matter with the PRC at this time, since
they have not asked us for Ex-Im credits, but study the matter. However,
the NAC, although usually the forum for studying financial issues of this type,
is too large for this task and the fact of the study would quickly leak. Accord-
ingly, the best means of handling this would be to ask the Treasury to chair
an interagency committee to review the problem.
I.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
4
I.b. Actions which the USG should take unilaterally at this time:
Encourage U.S. businessmen to invite their Chinese counterparts
to the U.S.
Begin a review in the National Advisory Council (NAC) of alleged
Chinese delinquencies relative to the Ex-Im Bank.
Begin referring all businessmen wishing information on PRC trade
to the appropriate office in the Department of Commerce.
Instruct the American Consulate General in Hong Kong to expand
cooperation with the American Chamber of Commerce.
II.
Near-term actions (three to six months from now)
Annouce the formation of the Sino-American Trade Council (SATC).
As one of its first activities it would contact the Chinese Council for the
Promotion of International Trade regarding the possibility of our sending
a vanguard trade delegation to China. The SATC would work in close coop-
eration with the Department of Commerce.
Initiate discussions of topics listed in the memorandum to Ambassador
Huang.
Give the Chinese a selective list of trade fairs in the U.S. and encourage
their attendance.
Encourage the SATC to organize a trade exhibit in China.
Invite PRC to hold a trade exhibit in the U.S.
III.
Intermediate term actions (six to twelve months from now)
Provide Commerce and Agriculture assistance to collective exhibitions
by U.S. firms in China.
Seek through Paris to arrange for contact between the U.S. Commodity
and Credit Corporation and the PRC national cereals, oils, and foodstuffs
import and export corporation to explore the possibility of grain sales.
IV.
Actions which can be done at any time:
Explain to the PRC that adequate end-use information is required for
all valid export license cases by the Department of Commerce.
Reproduced at the Richard Nixon Presidential Library
DECLASSIF been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
5
Ask the PRC through Paris for details and procedural information on
Chinese trademark laws.
Use the American Consulate General in Hong Kong to encourage
specialized banking contacts to facilitate trade with the PRC. (Treasury
representatives would act as liaison in this. )
COMMENTS:
The first issue which must be decided is whether another SRG meeting is
necessary. We do not believe it is. The paper presents only two conten.
tious issues to be decided, and we recommend that you make those decisions
so that we can promptly begin our trade contacts with the Chinese in Paris.
We also believe that the memorandum to Ambassador Huang should be
modified to effect the following changes:
Indicate that we recognize the PRC's interest in MFN but view this as
a subject for later discussion.
Place greater stress on the necessity of beginning discussions in the
near future on the settlement of claims.
Delete reference to alleged PRC failure to repay Export-Import Bank
debt.
Remove reference to U. S. prohibitions on "certain endangered animal
species".
Remove reference to U. S. antidumping regulations.
Remove for the time being reference to the cotton textile issue, but
present it to the Chinese in a separate memorandum within the next several
weeks. (Ambassador Watson should indicate orally that we will do this soon. )
Approve the general scenario submitted by State Department, but ask
that no mention be made to the PRC of U. S. changes in transportation regula-
tions at this time. Request that appropriate documents be submitted to the
President so that he may, at the time of his choosing, make the appropriate
determinations regarding travel and reciprocal ship visits. (It would be
especially inappropriate to move on this now, when the question of PRC
shipping to North Vietnam is so controversial.)
Attached is a memorandum from you and Flanigan to the appropriate agencies
informing them of the decisions which have been taken and how they should
proceed. (Attached at Tab A.)
SECRET/NODIS/HOMER at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
6
SECRET/NODIS/HOMER
RECOMMENDATION:
That you sign the joint NSDM at Tab A.
Concurrence: Col. Richard T. Kennedy
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
3556
DEPARTMENT OF STATE
Washington, D.C. 20520
April 24, 1972
SECRET/NODIS/HOMER
MEMORANDUM FOR MR. HENRY A. KISSINGER
THE WHITE HOUSE
Subject: Implementation of NSSM-149,
China Trade
As requested at our March 31 Senior Review Group
meeting I attach State and Commerce recommendations for
implementation of NSSM-149 on trade with the People's
Republic of China. Also attached are proposed negotiating
instructions to be sent to Ambassador Watson, if these
recommendations are approved.
A decision is required on whether the issue of Most
Favored Nation status should be raised at U.S. initiative.
State favors inclusion of such a discussion and Commerce
opposes. The alternative positions are presented as
options on pages 3-4. The instructions to our Ambassador
and the Memorandum to be delivered to Ambassador Huang
will have to be brought into conformity with whatever
decision is reached on this point.
A decision is also required on whether questions
involving Eximbank financing should be raised in the
Memorandum to be delivered to Ambassador Huang. Commerce
holds that if the PRC is to be held legally responsible
for certain debts to Eximbank this item should be in-
cluded because until the issue is settled Eximbank
financing would not be available to the PRC. Even if we
decide to hold the PRC legally responsible for these
debts to Eximbank, State opposes inclusion of this item
in the Memorandum on the grounds that a) we should not
raise any public USG claims as contentious issues at
this stage and b) the PRC is not currently interested in
obtaining Eximbank or other foreign financing. The
Memorandum to be delivered to Ambassador Huang will have
to reflect whatever decision is reached on this point.
Port Security regulations and Transportation Order
T-2 must be amended before Ambassador Watson can be
authorized to inform Ambassador Huang (as is recommended)
that U.S. flag carriers are authorized to enter China
and PRC carriers are authorized to enter the U.S.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
2
We continue to endorse the recommendation made in
both NSSM-149 and U/SM-91 that Transportation Order T-2
be amended to permit U.S. flag ships and aircraft to
visit the PRC.
As NSSM-149 pointed out, however, if the U.S.
scheduled airlines with authority to serve the PRC
(Pan American, TWA and Northwest) are not restrained
from approaching the PRC individually as soon as T-2 is
amended, the PRC would be in a position to play off one
U.S. airline against another in a way that would be
contrary to over-all U.S. interests.
To minimize this possibility, we recommend that if
and when T-2 is amended, such action be accompanied by
a public statement to the effect that the eventual
establishment of scheduled services would be subject to
US-PRC intergovernmental discussions. We also urge that
the Department of State be given advance notice of the
T-2 amendment so that we can immediately instruct the
scheduled airlines not to approach the PRC about estab-
lishing scheduled services until authorized to do so.
(The foregoing recommendations would be consistent with
Option 29 of NSSM-149.)
Copies of this memorandum are being sent to the
CIEP and to the other members who were present at the
March 31 Senior Review Group meeting, as well as to the
Department of Agriculture.
Winthrop G. Brown
Winthrep 60 Brown
Chairman, Interdepartmental Group
Enclosures:
1. Recommendations
2. Proposed Telegram to Ambassador Watson
3. Proposed Memorandum and Annexes
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
Recommendations for Implementing NSSM-149
This paper sets forth joint State and Commerce
Department recommendations concerning the sequence,
timing, and implementation of the steps outlined in
NSSM-149: U.S.-P.R.C. Trade.
What Has Already Been Done
In response to our inquiry, the Chinese have
indicated they prefer that Americans wishing to travel
to China apply for visas at the Embassy of the People's
Republic of China in Ottawa. Under unusual circum-
stances, they are prepared to process visa applications
at any of their other embassies as well.
The Chinese have informed us that they issued
invitations to 30 U.S. firms to attend the Chinese
Export Commodities (Canton) Fair (April 15-May 15).
RECOMMENDATIONS
I. What Should We Do Now (Within the Next 3 Months)
To develop U.S.-P.R.C. relations in a manner that
best serves U.S. interests, we should present to the
Chinese as soon as possible a well defined set of
proposals and notifications of action which the United
States is taking to implement the trade sections of the
Shanghai Communique. This will focus their attention
on what we consider the most appropriate issues.
1. Proposed Formation of a Sino-American
Trade Council
Notify the P.R.C. that the United States is in the
process of forming a prestigious, private Sino-American
Trade Council (SATC) which will act as a central clearing
house for information and research on P.R.C. trading
practices for U.S. businessmen. Commerce, in consulta-
tion with State, will be responsible for selecting the
group of firms that will initially comprise the SATC and
furnish them with all appropriate services to ensure its
successful development. (Options 6-7, pp. 24-26 in
NSSM-149).
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
3
between us. This would make the Chinese agreement to
discuss the issue a matter of formal record (Option 19,
pp. 59-61 in NSSM-149)
b. Scheduled Air Service Between China
and the United States. The Memorandum should note the
necessity of hearings by the Civil Aeronautics Board to
determine which U.S. airline (s) would be given the
route (s) (Options 28, 29; pp. 41-42 in NSSM-149)
C. U.S. Import Restrictions on textiles and
other goods. The Memorandum should present concise
explanations of U.S. import restrictions, clarify the
criteria for determining market disruption and dumping,
and explain the procedures for handling these problems.
The Memorandum should also offer to provide more detailed
explanations if desired (Options 22-25, pp. 64-69 in
NSSM-149).
d. 1) Most Favored Nation Tariff Treatment for
Chinese Goods and Settlement of Export-Import Bank Debt.
State and Commerce have differing views on these
questions which are presented below. The P.R.C. raised
this matter at a high level in Peking and State wishes
to take cognizance of their interest. The instructions
to our Ambassador and the Memorandum to be left with
Ambassador Huang will have to be changed according to
the determination made.
OPTION 1. (RECOMMENDED BY STATE)
The Memorandum should take cognizance of P.R.C. interest
in MFN and offer to negotiate a bilateral agreement
which would lead to seeking legislation to grant MFN
status to the P.R.C.
Advantages:
Would be responsive to P.R.C. inquiries on MFN
in Peking during the Presidential visit.
Would offer positive element in developing
trade relations.
Would provide incentive for P.R.C. to settle
private claims issue.
SECRET /NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
4
Disadvantages:
-- Might make U.S. side appear to be overanxious.
-- Might be premature in view of long time
required to get necessary legislation.
OPTION 2. (RECOMMENDED BY COMMERCE)
Make no mention of MFN in the Memorandum passed to
Ambassador Huang, but instruct our Ambassador to reply,
if asked, that MFN should be a subject for later dis-
cussions after major initial issues, such as claims,
are resolved.
Advantages:
-- Would avoid making us appear overeager.
-- Would keep our reserve on a negotiable issue.
Disadvantages:
-- Would miss opportunity to tie Paris talks into
discussions in Peking.
-- Would allow the Chinese to raise the issue in a
framework of their choosing.
-- Would leave the Memorandum passed to
Ambassador Huang largely negative in tone.
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
5
d. 2) Settlement of Export-Import Bank Debt
The Export-Import Bank asserts certain claims
against the P.R.C. deriving from shipments of U.S. goods
to China before the P.R.C. was established in October,
1949. It holds that until periodic payments are made
under these claims it cannot finance trade with the
P.R.C. State and Commerce have differing views on
whether this issue is pertinent. These views are
represented in the two options below. The instructions
to our Ambassador and the Memorandum to be left with
Ambassador Huang will have to be changed according to
the determination made.
OPTION 3. (RECOMMENDED BY COMMERCE)
If a policy determination is made that the debts presently
ascribed by the Export-Import Bank to the P.R.C. are
properly lodged against the P.R.C., inscribe this issue
in the Memorandum to be passed to Ambassador Huang as
one of the subjects for future discussion.
Advantage:
-- Would permit early determination on whether
EXIMBANK financing would be available to finance
US-PRC trade.
Disadvantages:
-- Would raise an issue of no current interest to
the P.R.C. since it does not seek foreign financing at
present.
-- Could introduce as contentious issues other USG
claims and P.R.C. counterclaims.
OPTION 4. (RECOMMENDED BY STATE)
That the issue of USG claims not be raised at this time,
nor in this Memorandum, but that the effect of these
alleged delinquencies on P.R.C. eligibility for Eximbank
financing be considered by the National Advisory Council
for International Monetary and Financial Policies (NAC).
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
6
Advantages:
-- Would result in a coordinated interagency
determination on whether or not the P.R.C. is eligible
for Eximbank programs.
-- Would permit a considered position on the total
USG claims against the P.R.C.
Disadvantage:
-- None.
e. Industrial Property Protection (Patents,
Trademarks and Copyrights) should be mentioned as an
issue of great importance to the United States and a
statement of our practice in following international
conventions regarding these matters provided
(Option 33, pp. 45-46 in NSSM-149)
ACTIONS THAT SHOULD BE TAKEN UNILATERALLY BY THE USG
AT THIS TIME
5. Encourage U.S. Businessmen to Invite Their
Chinese Counterparts to the United States
United States businessmen, especially those attending
the Canton Trade Fairs, should be encouraged to invite
Chinese businessmen to the United States (Option 12,
pp. 28-29 in NSSM-149)
6. Alleged Chinese Delinquencies Relative to the
Export-Import Bank should be reviewed by the National
Advisory Council for International Monetary and Financial
Policies as expeditiously as possible (Option 32, p. 63
in NSSM-149).
7. All Businessmen Wishing Information on the P.R.C.
Market and Foreign Trade Practices Should be
Referred to the Office of International
Commercial Relations, Bureau of International
Commerce, Department of Commerce (Option 5,
pp. 23-24 in NSSM-149).
8. The American Consulate General Should be Instructed
to Expand Cooperation with the American Chamber of
Commerce in Hong Kong (Option 4, p. 23 in NSSM-149)
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
7
II. The Near Term (3-6 Months from Now)
1. Announce the Formation of a Prestigious, Private
"Sino-American Trade Council" (SATC) referred
to in I. 1 above. The Council will act as a central
clearing house for information and research on P.R.C.
trading practices for American businessmen. The SATC
should, as one of its first activities, contact the
Chinese Council for the Promotion of International Trade
regarding the possibility of sending a vanguard trade
delegation to China (possibly accompanied by one or more
U.S. Government representatives) to visit the P.R.C.'s
foreign trade corporations, research institutes, marketing
agencies and trade fair authorities. The SATC would work
in close cooperation with the Department of Commerce
(Options 6-7, pp. 24-26 in NSSM-149)
2. Initiate Discussion of Topics Listed in the
Memorandum
3. Give the Chinese a Highly Selective List of
Trade Fairs in the United States and Encourage
Their Attendance. Offer to facilitate P.R.C.
attendance by issuing visas, acting as a liaison with
fair authorities, etc. (Option 14, pp. 30-31 in NSSM-149)
4. Encourage the Sino-American Trade Council (SATC)
to Organize a Comprehensive Solo Exhibit in
Peking and Other Chinese Cities. The Commerce
Department would provide whatever assistance is appropriate
at that time (Option 10, p. 27 in NSSM-149).
5. Invite the P.R.C. to Hold a Comprehensive Solo
Exhibit in the United States. The Chinese are
participating in the Canadian National Exhibition (Toronto,
August 16-September 4, 1972) with a comprehensive, solo
exhibit. We should propose that they bring this exhibit
to the United States (Option 13, p. 29 in NSSM-149)
III. Intermediate Term (6-12 Months from Now)
1. Provide Commerce and Agriculture Department
assistance to collective exhibitions by U.S.
firms of a single or multiple product line
in Peking or another Chinese city (Option 11,
p. 27 in NSSM-149).
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET/NODIS/HOMER
8
2.
Seek through Paris to arrange for contact
between U.S. Commodity Credit Corporation and P.R.C.
Ceroil (China National Cereals, Oils and Foodstuffs
Import and Export Corporation) representatives. If
prospects appear worth following up, encourage repre-
sentatives of U.S. grain export firms and Western Wheat
Association to apply for visas to visit the P.R.C. to
explore wheat trade possibilities with Ceroil officials.
Those labor unions on the west coast that would be
involved in such grain shipments are favorably disposed
toward exporting grain to the People's Republic of China
(Option 26, p. 35 in NSSM-149)
IV. Can Be Done At Any Time
1. Explain to the P.R.C. (preferably at the
earliest opportunity) that adequate end-use information
is required for all validated export license cases.
Emphasize to U.S. exporters the great importance which
full product end-use information will have in licensing
decisions for the P.R.C. (Option 18, p. 44 in NSSM-149)
2. Ask the P.R.C. through Paris for details and
procedural information on Chinese trade-mark law. Upon
confirmation that the P.R.C. law reads as we believe it
to, inform the P.R.C. that its nationals may receive
trademark protection in the United States and request
reciprocal treatment for U.S. citizens in the P.R.C.
Ask the P.R.C. for information on the protection available
for foreigners' inventions and technology under its laws
and regulations, including details on any patent and/or
inventor's certificate system that the P.R.C. has in
force (Option 33, p. 45-46 in NSSM-149)
3. Use the American Consulate General in Hong Kong
to encourage specialized banking contact. The Treasury
representative could act as a liaison between American
bankers and their P.R.C. counterparts (Option 9, p. 32
in NSSM-149).
SECRET/NODIS/HOMER
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SUGGESTED TELEGRAM IMPLEMENTING NSSM-149
SECRET
ACTION {ROUTINE} PARIS
NODIS/HOMER
FOR AMBASSADOR ONLY FROM THE SECRETARY
SUBJ: US-PRC TRADE
1. WE BELIEVE THAT YOU SHOULD TAKE ADVANTAGE OF THE RETURN
OF AMBASSADOR HUANG FROM PEKING TO INFORM THE PRC OF A
NUMBER OF CONCRETE ACTIONS THE US HAS TAKEN OR IS TAKING TO
IMPLEMENT THE TRADE SECTIONS OF THE SHANGHAI COMMUNIQUE.
2. WE HAVE PREPARED A LIST OF IMPORTS AND EXPORTS THAT
APPEAR TO OFFER THE GREATEST POTENTIAL FOR US-PRC TRADE.
LIST FOLLOWS IN SEPTEL. YOU SHOULD INDICATE TO THE CHINESE
THAT THIS LIST IS MERELY PRELIMINARY. WE WOULD WELCOME
THEIR COMMENT ON IT AND CLARIFICATION FROM THEM OF WHAT THEY
WOULD LIKE TO BUY AND SELL. WE FOR OUR PART ARE PREPARED TO
PROVIDE THEM WITH WHATEVER COMMERCIAL INFORMATION THEY WOULD
LIKE--INCLUDING ECONOMIC DATA, MARKET INFORMATION, TRADE
REGULATIONS, ETC. WE HOPE THAT THEY WILL BE ABLE TO
PROVIDE US WITH SIMILAR INFORMATION IN RETURN.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
2
3. YOU SHOULD INFORM AMBASSADOR HUANG THAT WE WILL CONSIDER
FAVORABLY EXPORT LICENSE APPLICATIONS FOR A BROAD RANGE OF
COMMODITIES INTENDED FOR PEACEFUL END USES.
4. YOU SHOULD INFORM AMBASSADOR HUANG THAT THE PRESIDENT
HAS TAKEN ACTION TO REMOVE THE SPECIAL LICENSING REQUIREMENT
FOR US AIRCRAFT AND VESSELS VISITING THE PRC. AT THE SAME
TIME, US PORT SECURITY REGULATIONS HAVE BEEN AMENDED TO
PERMIT CHINESE VESSELS TO VISIT US PORTS ON THE SAME BASIS
AS THOSE FROM THE USSR, THAT IS AFTER MAKING A REQUEST
14 DAYS IN ADVANCE. SHOULD PRC-REGISTERED AIRCRAFT DESIRE
TO FLY TO OR OVER US TERRITORY THEY SHOULD INFORM THE US
GOVERNMENT AS FAR IN ADVANCE AS POSSIBLE OF THE DETAILS OF
THE FLIGHT. ADVANCE NOTIFICATION AND A SPECIAL PERMIT ARE
REQUIRED OF ALL AIRCRAFT REGISTERED IN A STATE WHICH IS
NOT A MEMBER OF THE INTERNATIONAL CIVIL AVIATION ORGANIZATION
{ICAO}. OUR UNDERSTANDING IS THAT THE PRC DOES NOT CONSIDER
ITSELF A MEMBER OF ICAO.
5. YOU SHOULD INFORM AMBASSADOR HUANG THAT WE ARE ABOUT TO
ENCOURAGE THE FORMATION OF A COUNCIL OF PROMIMENT BUSINESS-
MEN AND MANUFACTURERS DEDICATED TO THE PROMOTION OF US-PRC
TRADE. THE COUNCIL WILL BE IN TOUCH WITH THE CHINA COUNCIL
FOR THE PROMOTION OF INTERNATIONAL TRADE {CCPIT} AND MAY
WISH TO SPONSOR A VANGUARD TRADE DELEGATION OF PROMINENT
US BUSINESSMEN AND ONE OR MORE US GOVERNMENT REPRESENTATIVES
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
3
TO VISIT CHINESE FOREIGN TRADE CORPORATIONS, RESEARCH
INSTITUTES, MARKETING AGENCIES AND TRADE FAIR AUTHORITIES
IN THE PRC. WE WILL INFORM AMBASSADOR HUANG WHEN THE
COUNCIL HAS BEEN FORMED AND WILL REQUEST HIS ASSISTANCE IN
FACILITATING CONTACT BETWEEN IT AND THE CCPIT.
6. WE HAVE PREPARED A MEMORANDUM SETTING FORTH POSSIBLE
FUTURE TOPICS FOR DISCUSSION IN PARIS BETWEEN YOU AND
AMBASSADOR HUANG OR YOUR REPRESENTATIVES. YOU SHOULD
LEAVE THE MEMORANDUM, WHICH FOLLOWS SEPTEL, WITH HUANG,
INDICATING THAT THESE ARE TOPICS WE BELIEVE IT DESIRABLE
TO DISCUSS LATER AT TIMES TO BE MUTUALLY AGREED. WE WOULD
WELCOME HIS COMMENTS AND THE PROPOSAL OF ADDITIONAL TOPICS
BY THE CHINESE SIDE AFTER HE HAS HAD AN OPPORTUNITY TO
STUDY IT.
7. {THIS PARAGRAPH IS TO BE USED ONLY IF THE SUBJECT OF
MFN IS DROPPED FROM THE MEMORANDUM TO BE LEFT WITH
AMBASSADOR HUANG.: {RECOMMENDED BY COMMERCE, OPPOSED BY STATE}
IF AMBASSADOR HUANG ASKS ABOUT MOST FAVORED NATION {MFN}
STATUS FOR THE PRC, YOU SHOULD REPLY THAT MFN SHOULD BE A
SUBJECT FOR LATER DISCUSSIONS AFTER MAJOR INITIAL ISSUES,
SUCH AS PRIVATE CLAIMS, ARE RESOLVED.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
ACTION:
PARIS
NODIS/HOMER
SUBJ: COMMODITIES FOR EXPORT TO THE PRC
THE FOLLOWING GENERAL CATEGORIES OF COMMODITIES MADE OR
GROWN IN THE UNITED STATES APPEAR TO OFFER THE BEST POTENTIAL
FOR EXPORT TO THE PRC, SUBJECT TO FULL INFORMATION ON END
USE FOR THOSE COMMODITIES REQUIRING VALIDATED LICENSES.
WHEAT AND GRAINS
RUBBER AND RUBBER PRODUCTS, NATURAL AND SYNTHETIC
SYNTHETIC TEXTILES
MOST METALS AND SEMIFABRICATED METAL PRODUCTS
FERTILIZERS
MOST CHEMICALS
PHARMACEUTICAL AND MEDICINAL PRODUCTS
MINING MACHINERY
MOST PETROLEUM EXPLORATION, DRILLING, AND PRODUCTION
EQUIPMENT FOR SHALLOW TO MEDIUM DEPTHS
TEXTILE MACHINERY
FOOD INDUSTRY MACHINERY, AND OTHER MACHINES TO MANUFACTURE
A WIDE RANGE OF CONSUMER GOODS
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
2
ROLLING MILLS, MANY TYPES
REFRIGERATION AND AIR CONDITIONING EQUIPMENT
PLASTICS MANUFACTURING AND FABRICATING EQUIPMENT
MOST INDUSTRIAL PROCESS CONTROL EQUIPMENT
MANY TYPES OF MACHINE TOOLS
AGRICULTURAL MACHINERY
ENGINES, GASOLINE AND DIESEL, MOST TYPES
TELEVISION AND RADIO EQUIPMENT, HOME AND STUDIO TYPES
ELECTRONIC COMPONENTS, MANY TYPES
ELECTRONIC TEST EQUIPMENT, MANY TYPES
OFFICE EQUIPMENT AND MACHINES
SOME ELECTRONIC COMPUTERS
ELECTRIC GENERATION AND TRANSMISSION EQUIPMENT
EARTH MOVING AND CONSTRUCTION EQUIPMENT
AUTOMOTIVE EQUIPMENT, INCLUDING MOST TRUCKS, CARS, BUSES, ETC.
RAILWAY EQUIPMENT, FIXED AND ROLLING
CIVIL AIRCRAFT, INCLUDING AVIONICS AND FLIGHT CONTROL
EQUIPMENT ESSENTIAL TO SAFETY
GROUND AVIATION ELECTRONIC EQUIPMENT NEEDED FOR SAFETY,
SEVERAL TYPES
LABORATORY INSTRUMENTS, MANY TYPES
PHYSICAL PROPERTIES TESTING EQUIPMENT, MANY TYPES
CAMERAS, PROJECTORS AND OPTICAL EQUIPMENT OF MOST COMMERCIAL
TYPES
TECHNOLOGY FOR MANUFACTURING A WIDE VARIETY OF CONSUMER
GOODS AND COMMON INDUSTRIAL PRODUCTS
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SUGGESTED TELEGRAM IMPLEMENTING NSSM-149
SECRET
ACTION: PARIS
NODIS/HOMER
FOR AMBASSADOR ONLY FROM THE SECRETARY
SUBJ: US-PRC TRADE -- MEMORANDUM TO BE LEFT WITH
AMBASSADOR HUANG
REF: STATE
A - THE UNITED STATES NOTES THAT THERE ARE A NUMBER
OF HIGHLY TECHNICAL AND SPECIALIZED SUBJECTS RELATING TO
THE FACILITATION OF TRADE BETWEEN THE UNITED STATES AND
THE PEOPLE'S REPUBLIC OF CHINA WHICH COULD BE THE TOPIC
OF DISCUSSION IN PARIS AT TIMES TO BE DETERMINED BY
MUTUAL AGREEMENT.
WE WOULD WELCOME AN OPPORTUNITY FOR DISCUSSION AT A
LATER DATE OF THE FOLLOWING SUBJECTS IN PARTICULAR:
1. SETTLEMENT OF PRIVATE CLAIMS BETWEEN THE TWO
COUNTRIES.
WE RECALL THAT SECRETARY OF STATE ROGERS RAISED THIS
ISSUE IN INFORMAL CONVERSATION WITH MINISTER OF FOREIGN
AFFAIRS CHI P'ENG-FEI IN PEKING AND THAT THE MINISTER
INDICATED THAT THIS WAS A MATTER WHICH COULD BE DISCUSSED
BY THE TWO SIDES. WE REMAIN CONCERNED THAT PRIVATE
CLAIMANTS MAY ATTEMPT TO ATTACH CHINESE COMMERCIAL
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
2
PROPERTY OR SHIPS WHICH COME WITHIN THE JURISDICTION OF
U.S. COURTS BY BRINGING LAWSUITS AS TRADE DEVELOPS
BETWEEN OUR TWO COUNTRIES. WE WOULD BE UNABLE TO
PREVENT SUCH SUITS DESPITE THE ADVERSE IMPACT THAT THEY
WOULD HAVE ON THE PROGRESSIVE DEVELOPMENT OF MUTUALLY
BENEFICIAL TRADE BETWEEN THE US AND CHINA. IN THESE
CIRCUMSTANCES WE BELIEVE THAT OUR TWO COUNTRIES SHOULD
NEGOTIATE AN EQUITABLE SETTLEMENT OF PRIVATE CLAIMS
BEFORE TRADE REACHES DIMENSIONS WHICH MIGHT PROMPT A
CLAIMANT TO INITIATE A COURT SUIT. SUCH A SETTLEMENT
WOULD SIGNIFICANTLY FACILITATE THE LONG-TERM GROWTH OF
TRADE BETWEEN OUR TWO COUNTRIES.
2. SCHEDULED AIR SERVICE BETWEEN THE TWO COUNTRIES.
ONE OBVIOUS WAY OF FACILITATING TRADE WOULD BE TO
INAUGURATE SCHEDULED AIR SERVICE BETWEEN THE UNITED STATES
AND THE PEOPLE'S REPUBLIC OF CHINA. ACTION BY THE U.S.
CIVIL AVIATION BOARD WOULD BE NECESSARY TO DETERMINE WHICH
U.S. AIRLINE WOULD BE AUTHORIZED TO SERVE AIR ROUTES WHICH
MIGHT BE ESTABLISHED BY MUTUAL AGREEMENT BETWEEN OUR TWO
COUNTRIES. WE WOULD WELCOME AN EXPRESSION OF THE CHINESE
VIEW ON INAUGURATION OF RECIPROCAL SCHEDULED AIR SERVICE.
3. N.B. STATE RECOMMENDS INCLUSION OF FOLLOWING
PARAGRAPH {"A"}. COMMERCE OPPOSES THIS TEXT AND PROPOSES
SUBSTITUTION OF ANOTHER PARAGRAPH {"B"}, WHICH STATE
OPPOSES. THE REASONS FOR THESE POSITIONS ARE GIVEN IN
THE TRANSMITTING MEMORANDUM.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
3
{"A"} "IN THE TALKS IN PEKING THE CHINESE SIDE RAISED THE
ISSUE OF MOST FAVORED NATION STATUS AND THE EFFECT THAT
THE LACK OF IT WOULD HAVE ON THE DEVELOPMENT OF TRADE
RELATIONS BETWEEN OUR TWO COUNTRIES. THE US SIDE NOTED
THAT SUCH STATUS IS CUSTOMARILY CONFERRED AFTER NEGOTIATION
OF A BILATERAL AGREEMENT AND THAT SPECIAL LEGISLATION MUST
BE SOUGHT FROM THE U.S. CONGRESS IN ORDER TO CONFER MOST
FAVORED NATION STATUS UPON SOCIALIST STATES. AT PRESENT
ONLY POLAND AND YUGOSLAVIA HAVE SUCH STATUS AMONG EASTERN
EUROPEAN STATES, AND LEGISLATION IS PENDING IN CONGRESS
TO GRANT MOST FAVORED NATION STATUS TO ROMANIA. WE WOULD
BE PREPARED TO ENTER NEGOTIATIONS ON MFN WITH THE PEOPLE'S
REPUBLIC OF CHINA AT A MUTUALLY CONVENIENT TIME."
{COMMERCE RECOMMENDS INCLUSION OF THE FOLLOWING TEXT;
STATE OPPOSES-SEE ABOVE.
{"B"} "SETTLEMENT OF EXPORT-IMPORT BANK CLAIMS AGAINST
THE PRC.
"ONE WAY OF FACILITATING TRADE WOULD BE THROUGH
UTILIZATION OF FINANCING UNDER FAVORABLE TERMS EXTENDED BY
THE EXPORT-IMPORT BANK. EXPORT-IMPORT BANK CANNOT EXTEND
SUCH CREDIT AT PRESENT BECAUSE IT DOES NOT HAVE LEGAL
AUTHORITY TO DO so. THERE IS ALSO THE PROBLEM OF OUTSTANDING
BALANCES ON FOUR CATEGORIES OF EXPORT-IMPORT BANK FINANCING
PROVIDED CHINA BEFORE THE FOUNDING OF THE PRC: CARGO VESSELS;
GENERATING EQUIPMENT AND ENGINEERING SERVICES; RAILWAY REPAIR
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
4
MATERIALS, AND EQUIPMENT FOR COAL MINING. WE BELIEVE THAT
THE PRC HAS ENJOYED THE USE OF THESE ITEMS. WE WOULD BE
WILLING TO SEEK LEGISLATION ENABLING THE EXPORT-IMPORT
BANK TO EXTEND FINANCING TO TRADE BETWEEN OUR COUNTRIES
PROVIDED A SATISFACTORY SETTLEMENT ON THESE OUTSTANDING
BALANCES IS ACHIEVED.
4. THE PROBLEM OF INDUSTRIAL PROTECTION.
WE NOTE THAT THE PEOPLE'S REPUBLIC OF CHINA, UNLIKE
THE USSR AND SOME OTHER SOCIALIST STATES, IS NOT A
SIGNATORY OF INTERNATIONAL CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY {PARIS UNION}. NEVERTHELESS, WE ARE
PREPARED TO FACILITATE CHINESE REGISTRATION OF TRADEMARKS
AND PATENTS IN ACCORDANCE WITH OUR LAWS AND REGULATIONS.
WE WOULD WELCOME RECIPROCAL TREATMENT FOR OUR CITIZENS BY
THE PEOPLE'S REPUBLIC OF CHINA.
B. THE UNITED STATES ALSO WISHES TO INFORM THE
PEOPLE'S REPUBLIC OF CHINA OF LONG-STANDING RESTRICTIONS
IMPOSED BY LEGISLATION OR INTERNATIONAL AGREEMENT UPON
CERTAIN KINDS OF IMPORTS INTO THE UNITED STATES. THEY ARE
DESCRIBED IN THE ATTACHED ANNEX TO THIS MEMORANDUM. SHOULD
THE CHINESE SIDE so DESIRE, WE WOULD BE PLEASED TO EXPLAIN
THESE IN DETAIL.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SUGGESTED TELEGRAM IMPLEMENTING NSSM-149
SECRET
ACTION: AMEMBASSY PARIS
STATE
NODIS/HOMER
FOR AMBASSADOR ONLY FROM THE SECRETARY
SUBJ: US-PRC TRADE -- MEMORANDUM TO BE LEFT WITH AMBASSADOR
HUANG - ANNEX
REF: STATE
1. RESTRICTIONS ON THE IMPORTATION OF COTTON TEXTILES.
THE UNITED STATES REGULATES IMPORTS OF COTTON TEXTILES
IN ACCORDANCE WITH THE PROVISIONS OF THE LONG-TERM ARRANGE-
MENT REGARDING INTERNATIONAL TRADE IN COTTON TEXTILES {LTA},
SIGNED AT GENEVA ON FEBRUARY 9, 1962 AND EXTENDED TO
SEPTEMBER 30, 1973.
THE LTA IS A MULTILATERAL ARRANGEMENT IN WHICH 30 OF
THE WORLD'S LEADING COTTON TEXTILE IMPORTING AND EXPORTING
COUNTRIES PARTICIPATE. NEGOTIATED UNDER THE AUSPICES OF
THE GENERAL AGREEMENT ON TARIFFS AND TRADE {GATT}, IT ALLOWS
THE UNITED STATES AND OTHER IMPORTING COUNTRIES TO LIMIT
COTTON TEXTILE IMPORTS IN ORDER TO PREVENT DISRUPTION OF
THEIR DOMESTIC MARKETS, AND ALSO ASSURES EXPORTING COUNTRIES
OF THE OPPORTUNITY FOR ORDERLY GROWTH IN THEIR COTTON
TEXTILE EXPORTS. IN ITS ADMINISTRATION OF THIS ARRANGE-
MENT, THE US DEFINES AS COTTON TEXTILES THOSE ITEMS IN WHICH
COTTON IS THE CHIEF FIBER BY VALUE. THESE TEXTILES ARE
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
2
CLASSIFIED INTO 64 CATEGORIES.
ARTICLE 3 OF THE LTA AUTHORIZES PARTICIPATING COUNTRIES
WHICH ARE COTTON TEXTILE IMPORTERS TO REQUEST CONSTRAINTS
ON EXPORTS OF PRODUCTS FROM PARTICIPATING SUPPLIER COUNTRIES;
AND ARTICLE 6 {C} ENVISAGES A SIMILAR ACTION AGAINST NON-
PARTICIPANTS IN ORDER TO ASSURE EQUITY FOR PARTICIPATING
SUPPLIER COUNTRIES. IN OTHER WORDS, THE LTA ENVISAGES,
AND THE EFFECTIVE MAINTENANCE OF THE PROGRAM REQUIRES,
THAT IMPORTS FROM NON-PARTICIPANTS BE SUBJECT TO LIMITATIONS
so AS TO PREVENT DISCRIMINATION AGAINST PARTICIPANT SUPPLIERS.
UNDER THE TERMS OF THE LTA, THE US HAS MOVED TO REGULATE
IMPORTS OF COTTON TEXTILES INTO THE US MARKET. UNDER
ARTICLE 4 THERE ARE CURRENTLY IN EFFECT 30 BILATERAL GOVERN-
MENT TO GOVERNMENT AGREEMENTS. IN ADDITION, 10 ARTICLE 3
ACTIONS ARE OUTSTANDING WITH REGARD TO IMPORTS OF COTTON
TEXTILES FROM EIGHT OTHER SUPPLYING COUNTRIES. THESE
ACTIONS HAVE BEEN TAKEN IN ORDER TO PREVENT DISRUPTION OF
THE US TEXTILE MARKET BY IMPORTS OF COTTON TEXTILES FROM
FOREIGN SUPPLIERS.
IN DETERMINING WHETHER THE MARKET IS DISRUPTED OR
THREATENED WITH DISRUPTION TOTAL IMPORTS FROM ALL COUNTRIES
MUST BE TAKEN INTO ACCOUNT; AND WE MUST DEAL WITH HISTORIC
SUPPLIERS WHO ASK WHY THEIR EXPORTS SHOULD BE CONTROLLED
WHILE NEWCOMERS ARE PERMITTED TO GAIN A FOOTHOLD IN THE
US.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
3
UNDER EXISTING POLICY THE US MAY BE REQUIRED, OUT OF
CONSIDERATION OF EQUITY FOR ITS TRADITIONAL SUPPLIERS, TO
LIMIT ITS IMPORTS OF COTTON TEXTILES FROM THE PEOPLE'S
REPUBLIC OF CHINA IN ORDER TO AVOID THE THREAT OF DISRUPTION
OF ITS DOMESTIC MARKET, AND TO PERMIT THE ORDERLY DEVELOP-
MENT OF BILATERAL TRADE ON A MUTUALLY BENEFICIAL BASIS.
2. RESTRICTIONS ON IMPORTATION OF CERTAIN KINDS OF
MEAT.
SEVERAL ACTS OF CONGRESS REQUIRE THE U. S. SECRETARY
OF AGRICULTURE TO ASSUME THE RESPONSIBILITY FOR PROTECTING
THE UNITED STATES AGAINST DISEASES OF FOREIGN ORIGIN.
THE ACT OF JUNE 17, 1930, CONTAINS AN ABSOLUTE PRO-
HIBITION AGAINST THE IMPORTATION INTO THE UNITED STATES OF
DOMESTIC RUMINANTS OR SWINE AND FRESH, CHILLED, OR FROZEN
MEAT OF ALL RUMINANTS OR SWINE FROM COUNTRIES DECLARED TO
BE INFECTED WITH FOOT-AND-MOUTH DISEASE OR RINDERPEST.
ONCE SUCH DECLARATION IS MADE, NO GOVERNMENTAL AGENCY HAS
ANY DISCRETIONARY AUTHORITY AND THE PROHIBITION IS ABSOLUTE.
BOTH FOOT-AND-MOUTH DISEASE AND RINDERPEST ARE BELIEVED TO
EXIST IN THE PEOPLE'S REPUBLIC OF CHINA.
IN ADDITION TO THE PROHIBITORY STATUTE, THERE ARE A
NUMBER OF OTHER ACTS OF CONGRESS WHICH PROVIDE THE SECRETARY
OF AGRICULTURE WITH THE AUTHORITY AND RESPONSIBILITY FOR
ESTABLISHING RESTRICTIONS APPLICABLE TO THE IMPORTATION OF
ANIMALS OR ANIMAL PRODUCTS THAT MIGHT TRANSMIT DISEASES OF
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
4
LIVESTOCK AND POULTRY. THE DEPARTMENT'S CURRENT IMPORT
RESTRICTIONS ARE APPLICABLE TO CATTLE, SHEEP, GOATS, OTHER
RUMINANTS, SWINE {INCLUDING DOMESTIC HOGS AND ALL VARIETIES
OF WILD HOGS}, HORSES {INCLUDING MULES, BURROS, ZEBRAS},
DOGS TO BE USED AROUND LIVESTOCK, AND POULTRY {CHICKENS,
DUCKS, GEESE, SWANS, TURKEYS, PIGEONS, DOVES, PHEASANTS,
GROUSE, PARTRIDGES, QUAIL, GUINEA FOWL, PEAFOWL, AND
HATCHING EGGS FROM THESE BIRDS}. RECENTLY PSITTACINE
BIRDS AND GREATER AND LESSER HILL MYNAH BIRDS HAVE BEEN
ADDED TO THE RESTRICTED LIST BECAUSE OF NEWCASTLE DISEASE.
OTHER ANIMAL PRODUCTS ARE POTENTIALLY ELIGIBLE BUT
ALL ARE REQUIRED TO BE CONSIGNED TO SPECIFICALLY APPROVED
ESTABLISHMENTS FOR FURTHER TREATMENT OR PROCESSING. MEAT
PRODUCTS, FULLY COOKED BY A COMMERCIAL METHOD AND PROPERLY
CANNED MAY BE PERMITTED ENTRY INSOFAR AS ANIMAL HEALTH IS
CONCERNED; HOWEVER, SUCH PRODUCTS ARE SUBJECT TO GOVERNMENT
MEAT INSPECTION REQUIREMENTS.
THE MEAT AND POULTRY INSPECTION PROGRAM OF THE U. S.
DEPARTMENT OF AGRICULTURE ADMINISTERS LAWS AND REGULATIONS
GOVERNING INSPECTION REQUIREMENTS FOR ALL FORMS OF RED MEAT
AND POULTRY PRODUCTS INCLUDING CANNED PRODUCTS BUT EXCLUDING
MEAT OF RABBITS, GAME BIRDS AND WILD ANIMALS. TO MEET
THESE REQUIREMENTS A FOREIGN MEAT EXPORTING COUNTRY MUST:
1} APPLY, THROUGH DIPLOMATIC CHANNELS, FOR OFFICIAL
RECOGNITION OF THEIR SYSTEM OF EXPORT MEAT INSPECTION
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
5
2} PROVIDE, AT THE TIME OF APPLICATION, COPIES OF LAWS
AND REGULATIONS WHICH WILL GOVERN ACTIVITIES IN THE PLANTS
HANDLING PRODUCT FOR EXPORT
3} AFTER IT HAS BEEN DETERMINED THAT THE APPLICABLE
LAWS AND REGULATIONS CORRESPOND TO U. S. STANDARDS, INVITE
A TEAM OF U. S. DEPARTMENT OF AGRICULTURE EXPERTS TO PERFORM
ON-SITE INSPECTION OF THE SYSTEM IN OPERATION.
IF AT THIS POINT THE U. S. DEPARTMENT OF AGRICULTURE'S
FINDINGS ARE FAVORABLE, THE FOREIGN EXPORTING NATION CAN
BE AUTHORIZED TO SHIP MEAT AND/OR POULTRY TO THE UNITED
STATES. IN CONNECTION WITH THE REQUIREMENTS OF THE MEAT
AND POULTRY INSPECTION PROGRAM, U. S. INSPECTORS USUALLY
VISIT "APPROVED" FOREIGN PLANTS FOUR TIMES ANNUALLY.
THE MEAT IMPORT ACT OF 1964 REQUIRES THE PRESIDENT TO
LIMIT IMPORTS OF FRESH, CHILLED OR FROZEN BEEF AND VEAL,
MUTTON AND GOAT MEAT. THE LAW ESTABLISHES A FORMULA, BASED
ON THE RELATIONSHIP BETWEEN IMPORTS AND DOMESTIC COMMERCIAL
PRODUCTION, FOR PROCLAIMING A QUOTA WHEN ESTIMATED IMPORTS
EXCEED TRIGGER LEVELS. WHEN MEAT IMPORTS APPROACHED THE
TRIGGER LEVEL IN 1968, A VOLUNTARY MEAT EXPORT RESTRAINT
PROGRAM WAS ADOPTED WITH THE MAJOR SUPPLYING COUNTRIES
AGREEING TO LIMIT EXPORTS TO THE UNITED STATES TO SPECIFIC
LEVELS TO AVOID THE NEED TO IMPOSE AN IMPORT QUOTA.
VOLUNTARY RESTRAINTS ARE STILL IN EFFECT. PROVISIONS CAN
BE MADE FOR NEW SUPPLIERS.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
6
3. RESTRICTION ON IMPORTATION OF CERTAIN KINDS OF FURS.
CURRENT U.S. TARIFF LEGISLATION PROHIBITS IMPORTATION
FROM EITHER CHINA OR THE USSR OF SEVEN KINDS OF SKINS:
ERMINE, FOX, KOLINSKY, MARTEN, MINK, MUSKRAT AND WEASEL,
RAW OR NOT DRESSED OR DRESSED. THE PROHIBITION DOES NOT
APPLY TO GARMENTS MANUFACTURED FROM SUCH SKINS.
4. PROHIBITION OF IMPORTATION OF CERTAIN ENDANGERED
ANIMAL SPECIES.
THE DEPARTMENT OF INTERIOR HAS THE AUTHORITY TO
PROHIBIT THE IMPORTATION OF THE SKINS OR OTHER PRODUCTS OF
CERTAIN SPECIES OF ANIMALS WHICH ARE ON THE ENDANGERED
SPECIES LIST FOR PURPOSES OTHER THAN PROPAGATION AND
ESSENTIAL SCIENTIFIC PURPOSES. CERTAIN ANIMALS ON THE
PROHIBITED LIST, SUCH AS THE DOUC LANGUR AND THE WILD YAK7
ARE NATIVE TO CHINA. THE SIBERIAN TIGER MAY ALSO SOON BE
LISTED AS AN ENDANGERED SPECIES.
5. ANTI-DUMPING REGULATIONS. THE ANTIDUMPING ACT OF
1921 219 U.S.C. 160} PROVIDES A REMEDY AGAINST INJURY DUE
TO UNFAIR PRICING BY FOREIGN SUPPLIERS IN THE U.S. MARKET.
SALES AT LESS-THAN-FAIR VALUE {LTFV} ARE GENERALLY
CONSIDERED TO OCCUR WHEN A PRODUCT IS SOLD FOR EXPORT TO
THE UNITED STATES AT A PRICE {I.E., U.S. PURCHASE PRICE}
LOWER THAN THE SELLER CHARGES IN HIS HOME MARKET, AFTER
ADJUSTMENTS HAVE BEEN MADE FOR CIRCUMSTANCES OF SALE,
DIFFERENCES IN QUANTITIES, AND DIFFERENCES IN THE MERCHANDISE
COMPARED.
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
7
THE ANTIDUMPING ACT REQUIRES THE SECRETARY OF THE
TREASURY TO ISSUE A DUMPING FINDING IMPOSING AN ADDITIONAL
DUTY WHENEVER TWO CRITERIA ARE MET: FIRST, THAT A CLASS
OR KIND OF FOREIGN MERCHANDISE IS BEING, OR IS LIKELY TO
BE, SOLD IN THE UNITED STATES AT LESS-THAN-FAIR VALUE
{LTFV}; AND SECOND, THAT AN INDUSTRY IN THE UNITED STATES
IS BEING OR IS LIKELY TO BE INJURED, OR IS PREVENTED FROM
BEING ESTABLISHED, BY REASON OF THE IMPORTATION OF SUCH
MERCHANDISE INTO THE UNITED STATES. DETERMINATION OF LTFV
SALES IS MADE BY THE SECRETARY OF THE TREASURY, WHILE
DETERMINATION OF INJURY IS MADE BY THE TARIFF COMMISSION.
THE CRITERIA FOR DETERMINING WHETHER IMPORTED PRODUCTS
ARE BEING SOLD AT LTFV IN THE U.S. MARKET ARE ESTABLISHED
BY REGULATIONS PROMULGATED BY THE SECRETARY OF THE TREASURY
{19CFR, PART 153}. FOR PURPOSES OF MAKING A FAIR VALUE
COMPARISON WITH THE U.S. PURCHASE PRICE, FOREIGN MARKET
VALUE MAY BE MEASURED IN SEVERAL WAYS. USUALLY, FOREIGN
MARKET VALUE IS THE PRICE CHARGED FOR HOME CONSUMPTION IN
THE EXPORTING COUNTRY. HOWEVER, IF THE QUANTITY SOLD IN
THE HOME MARKET IS so SMALL IN RELATION TO THE QUANTITY
EXPORTED TO COUNTRIES OTHER THAN THE UNITED STATES AS TO
BE AN INADEQUATE BASIS FOR COMPARISON WITH U.S. IMPORTS,
THEN THE FOREIGN MARKET VALUE IS BASED ON THE PRICE OF
SALES IN THOSE OTHER COUNTRIES. IF THESE TWO METHODS ARE
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
SECRET
8
INADEQUATE, A "CONSTRUCTED VALUE" BASED ON THE COST OF
PRODUCTION IS USED. IN THE CASE OF GOODS FROM COMMUNIST
COUNTRIES, WHICH MAY NOT BE PRICED ON THE BASIS OF
PRODUCTION COSTS, FAIR VALUE IS OFTEN BASED ON THE SALES
PRICE OF SIMILAR GOODS SOLD BY OTHER COUNTRIES.
THE U.S. PURCHASE PRICE IS CALCULATED AT THE U.S.
IMPORTER'S NET EX-FACTORY PURCHASE PRICE WHENEVER THE
BUYER AND SELLER ARE UNRELATED. IF THE U.S. BUYER IS A
SUBSIDIARY OR OTHERWISE RELATED TO THE FOREIGN SELLER,
THEN THE U.S. PURCHASE PRICE IS USUALLY CALCULATED FROM
THE PRICE CHARGED TO UNRELATED U.S. PURCHASERS.
IF THE SECRETARY OF THE TREASURY FINDS SALES AT LESS-
THAN-FAIR VALUE AND IF THE TARIFF COMMISSION FINDS INJURY,
THEN A SPECIAL DUMPING DUTY--GENERALLY EQUAL TO THE
DIFFERENCE BETWEEN THE HIGHER FOREIGN MARKET VALUE AND THE
LOWER U.S. PRICE PURCHASE--IS LEVIED ON THE IMPORTS IN
QUESTION.
SECRET
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
DOC
RECD
LOG NBR
INITIAL ACTION OFF
MO DA
NSC CORRESPONDENCE PROFILE
424
MO 42418 DA HR
3556
HOLORIDGE
LOG IN/OUT ONLY
TO: PRES
FROM: ELIOT
U
NO FORN
NODIS
KISSINGER
ROGERS, W
LOU
BUO
EXDIS
DOC SOURCE/CLASS/DESCRIPTION
HAIG
LAIRD, M
C
EYES ONLY
LIMDIS
S
CODE WORD
RES DATA
SUBJECT
Implementation MNSSN 145 TS -a SENSITIVE S Trade with
PRI
REFERENCE: S/S
OTHER
NOT XEROXED
APP'TS: PRES
HAK
TALKER
MEMCON
DATE REQ.
INTERNAL ROUTING AND DISTRIBUTION
ACTION REQUIRED
ACTION
INFO
REC
MEMO FOR HAK
(
CY
ADVANCE CYS TO HAK/HAIG
FOR
MEMO FOR PRES.
l
(
,
STAFF SECRETARY
FAR EAST
X
A
REPLY FOR
SIGNATURE
(
)
FOR DISTRIBUTION/DISPATCH
(
)
SECRETARIAT DISTRIBUTION/ACTION
SUB-SAHARAN AFRICA
MEMO
TO
(
)
NR EAST/NORTH AFRICA
RECOMMENDATIONS
(
)
EUROPE/CANADA
JOINT MEMO
(
)
LATIN AMERICA
REFER TO STATE
(
UNITED NATIONS
ECONOMIC
(Pune)
Q
ANY ACTION NECESSARY
(
)
x
CONCURRENCE
SCIENTIFIC
DUE DATE:
LR PLANNING
PROGRAM ANALYSIS
COMMENTS: (Including (4/28) Instructions)
NSC PLANNING
X
CONGRESSIONAL
5/19
DATE
FROM
"HM
TO
S
X
Age ACTION REQUIRED NSDn
5/26
CY TO
JHH
INTERNAL/INTERIM ROUTING
6/10
HAK sqd NSAM
6/10
Flaxigan sgol CIEPAM
€/10
DAVS
S
Dispatch / Distribution
(6/10)
6/11
See D Sheet
CROSS 6/14 REF WITH
Dovis standal memo
Dispatables by DATE I2
MICROFILM DATA
NOTIFY
SEE LOG
DO
JOINED BY LOG
MAAAM DISPATCH: LETTER/MEMO
INIT 8m
DISPOSITION
COPIES: (AS MARKED Que ABOVE)
DATE
JUN 1 71972
SPECIAL FILE ROMT:
SA,
HP,
HM
ORIG)
NSC
1
SPECIAL DISPOSITION COMMENTS:
TO
)
PAF
WHC
SUSPENSE CY ATTACHED:
YES
NO
SUBF
GPO 1972-455-927
Reproduced at the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.