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SECRET
130-15
Memo for Pres
From: USC Chairman Irwin
Feb 23, 1971
S/Sensitive
26167
Steps Toward Aug of Travel and Trade between PRC and US
You asked for recoms for steps to carry out policy of increasing contacts between PRC
a-nd US as step toward improvement of relations. AFter review based on DM 17 and
sturied under way in SM 106, USC (plus Commerce, Treas, Justice, Agric) recoms two
steps to facilitate personal contacts by relaxing restrictions on travel by American
and PRC citizens, as well as steps in 76 areas which wouldprovide basis for develop-
ment of mrenormal commercial relations. All steps can be impliemented without new
legisaltion.
Enclose study contining full review of issues and actions pssibilities considered by
USC. Following is summary of action recoms, with approp page refs to full study.
Travel
USC recoms removal of all passport rstrictions on travel to PRC when they
expire on March 15 (Travel, Option B), p 4. Justice opposes because it would afford
PRC better opportunities for intell acquisition, permit close clandestine contacts
between American Maoists, advocates of domestic violence and PRC, and make it earieser
for PRC to recruit sympathetic intell agents. RNmainder of USC believe potnetial gainst
outwieght risks.
SecState, under whose authority passport regs issued, concurs in recommenatin
that control on use of passports for travel to PRC be dropped on March 15, while
continuing them on travel to NVN, NK and Cuba. Would elimiante last formal passport
barrier on our part to travel by American citizens to PRC. Becasue of court decisons
and in keeping with our policy since 69 of granting exceptions to passport restrictions
on travel to PRC for broad categories of travelers, barrier has in any event had little
practical effect.
Also appears desirable to make public statement offering to expedite vasis for
groups of visitors from PRC to US in order to establish our iwllingness to facilitate
on reciprocal basis flow of persons between two countries. Justice opplses because
such groups would probably include rtrained subversive agents.
Tradew
US relzsed some of its controls affecting trade between PRC and third countries
in Dec 1969, in April 70 and in Augsut 7o by minor move on buknkering non-communist
ships. USC believes we should now commence relaxation of our controls on direct Sino-
US trade, eventually to accord PRC approx partity with Sov Un. Closer our treatment
of trade with PRC appracohes that applied to Sov Un, more seriously our azssertions
of willingness to improve relations with PRC will be believed, and more likely it
becomes that Peking will eventua 11y respond favoabley to our initaiives.
Timing
Trade steps could be a- complished separately or in single package. Single
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.
package would probably have most favorable effect on PRC, while gradualism runs greater
risk of inviting scornful responses from Peking.
hOwever, implementing these measures on steady phased basis, in undramatic
fashion, would minimize adverse effect on Taipei in genrearl and on our limited ability
to influence GRC on sensivie Chirep issue in particular. First step in this process,
if not too dramatic, might be hepful in making clear to GRC that while we are anxious
to help rpeserve its position in UN, our purpose of seeking improved relations with
mainland is still firm and something which it would do will to take seriously. Timing
of steps beyond initial one would depend on number of considerations, including cli-
mate of US-GRC relations and evolution of our Chirep position. For tehse raasions,
USC makes no recoms on precise timing after first step
To sum up, USC recoms approval of all steps described below, in deli-erately
spaced stages and in undramatic fashion, starting in near future with authorization
of direct export trade (Timing, Option A). USC prepared to supervise implementation
of your decision with aim of completing program at or near end 71.
Exports
USC objective ultimately to place exports to PRC on same footing as Sov Un,
but USC believes it necessary to review experience with more restricted level of
exports before moving all the way to that goal. Speciallly, USC recoms at this time
authorization of exports to PRC under general license of all commodities currently
under general license to USSR except those which, after item-by-item interagency
review, are deemded to be of strat significance to PRC (Exports, Option B, p. 16
Imports
USC recoms that later this year direct commercial imports from PRC be authorized
on essentially same basis as Sov Un (Imports, Option A). Impotant that this move
be corelated with exports, preferably as one of first steps subsequent to initial
export step.
Aircraft Sales
Gesture in trade fid ld which would enhacne pol impact of realxation of export
and import controls would be decision to permit export to China of used American pass
enger ac not under COCOM restrictions0Qof type which has been œerating in normal civil
use for more than one year) providing certain strat equipment on bord first removed.
We have in past approved sale of British- made ac contining American made components
after strat equipment removed.
Large number of ollder American ac owned by airlines which would like to sell the
to get capital to buy new American ac--which would be much welcomes by our industry.
E.G. proposal by Pak Int1 Airlines to sell to PRC three of its used Boeing 720B
passenger ac after certain strat equipment aborad is removed. If PRC makes firm offer
to PICA, we recom approval. We woduld accord same treatment on case-by-case basis to
proposed transactions re similar used passenger ac of American manufacture, after
certain start equipment removed.
Currency Congtrols
USC recoms relatization later this year of our cuurrency controls to permit
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.
Chinese use of dollars (Currency Controls, Option A). WOuld be important in conjunctio
with decision to permit direct trade, especially imports, but could also be put into
effect independently.
Bunkering
Irritation to PRC and to American oil companies could be removed by changing
bunkering controls (including those on petroleum products of US origin) to permit
fueling Chinese-owned or chartered carriers--surface as well as air-- (except those
bound to or from NVN, NK or Cuba) as well as non-communist and EE carriers bound to
or from China. USC recoms this relax of bunkering controls before end of yerar
(This realxation would not affect our existing controls on entry of PRC carriesrs into
US ports)
Trade Delegations
Step in trade field which would integrate closely with efforts to spur travel
between US and PRC wouhld be to propose exchange of trade delegations if circumstances
warrant, e.g. positive PRC response to our trade realxation emerges. USC recoms this S
step by authorized as means of getting proposal on record with PRC. Justice opposes.
Chinese Port Entry and Cargoes
USC recoms adoption of two steps to permit 1) US vessles to carry Chinese cargoes
between non-Chinese ports, and 2) US-owned foreign flag vdssels to call at Chinese
ports. (SHIpping, Options B and C) Make no recom on amending current regs to permit US
vessles and ac to call at Chinese ports at this time.
Note, however, that decision in export field to permit grain sales to PRC--major
importer of grain--would raise question of whether to allow more favorable treatment of
PRC than USSR by not requiring that 50% be shiping in American bottoms. ) Commerce
expects shortly to refer case to WH involving grain sales to USSR which is stymied bec
cause of cost of shipping 50% in American bottoms). If we do extend 50% requirement
to apply to PRC as well, we might defeat purpose of permitting sales of grain to PRC
because of high shippin costs. Morevoer, regs would have to be amended to permit US
ships to call at PRC ports.
We recom thisee steps, not in expectation of any substantial immediate increases
in travel or trace, but because their adoption would be designed to show fenuineness
of or desire to improve relations and eventually to develop
trade.
Letter to Hartnman, STaff Dire-ctor USC
Frolm: DepAttyGen Kleindiest
Feb 12, 1971
S
Response to Feb 2 request for comments on USC draft memo to Pres and attached
report on prposed steps to relax restrictions on travel to and trade with PRC.
Intell info available indicates that it PRC intention to direct its intell efforts
against US given opportunity. PRC Intell SErvice known to have sought
to gather intll data in US and Canada. Once having established Emb in Havana, CommChi
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.
trade, technoloical and cultural missions fanned out across LA. Members of these
missions were trained agents, who engaged in intensive subversive activities in some
LA countries. AS FBI pointed out, its experience with trade and smimilar delegations
entering US from Comm countreisindicates continued use of such groups for intell purpos
FBI also observed that there are in US individuals and groups in full agmt with Maoist
ideiological concepts iHx of inevitability of class conflict and world revolution.
They are-among advocates of domestic violence in this country. Leading figures in
revolutionary movement in US have traveleed to China. Particularly troubelsome torday
in light of VN war and hostility toward this country displayed by increasing number
of young militants.
REmoval of restricrions on travel by US citizens to CommChi couldopen door to intensif
fication of existing PRC intell efforts agisnt US. USC citizens who travel to Comm cou
countries regularly evaluated and assessed by hodtile intell services with view toward
recruitment for intell purposes. CommChi would be presented withopoortunities for
close clandestine contacts with US citizens who actively support Maoist idiology.
Finallv, re USC comment that our attempted restrictions on travel to CommChi, NK,
NVN and Cub are unenforceable, we call your attn to fact that Justice wich concurrence
of State, has strongly recommended prompt enactment of legialtion designed to empower
SecState to place effecgive controls on travel of American citizens to restricted
countries and areas.
In light of foregoing, Justice remains opposed to draft proposals which would relax
current travel estrictions in effect re Comm China
USC RESPENSEX Paper U/SM 91
S/Sensitive
Feb 22, 1971
Taravel and Trade with Communist China
USC has examined within broad framweork contempalted by SM 106 as well as earlier
decisions of DM 17 various steps which can be taken to relax restrictions on travel to
and further braden trade with Comm Chi. Steps considered by USC set forth below,
in some instances providing more than one variatnt depending on degree of change desire
Steps porposed all within authority of ExecBranch, since there areno legialtive.
barriesr to less restricted adminsitration of travel controls, and trade stpeps requiri
legis are more properly addressed in rlarger context of E-W trade.
Steps also primerily unilateral, requiring for most Dart no Chinese response.
Recognized tha rresults of measures outlined here will depend on how Chinese react, and
that further steps might be possible if Chinese evidence positive interest in coopera-
ting. REalitistically, was felt that matters requireing Chi assent best treatmen in
options conteind in long-range study of SM 106.
Travel Steps
Step 1: Travel of Amrican to PRC
Option
A.
REmove
all
passport
Reproduced at restriction the Richard Nixon Presidential ULibrary to PRO
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.5
Pros: Wold be psitive gesture which would attract considerable atntneiton and
be viewed as consistent with or desire to improve commo between Chinese and American
peoples. Would put onus for preventing travel of Americans to PRC pentirely on Peking.
If appreciable travel developed, would materially increase our overt access to intell o
on China.
Cons. GRC would fear that this relax portended further US reconciliation with
Peking at expense of Taipei. GVN and ROK would also be concerned, If PRC allowed
Amrican tourists to enter, they would not receive USG consular asst in PRC if in troubl
Would facilitate contact between PRC and American radical left, who might transit
China to NVN or NK.
Option B. When pasosport restrictions are due for renewal on March 15, omit PRC from
list of designated countries, leaving NVN, NK and Cuba on list--Recommendnede
Pros: Essentially identical to A. Would indicate that US no longer classes
PRC with DRV, NK and Cub a and that US considers contacts with Chinese people desirable
Cons: WOul have slight-y less impact than dropping PRC restriction separtely and
earlier; would still provde concern by GRC andothers, but propobably in lesser degree
than A. Would facilitate contact between PRC and American radical left, who might
transit China to NVN or NK.
Option C. Drop restrictions on travel to PRC, NK and Cuba on March 15, leaving res-
trictions on travel to NVN.
Pros: WOUld have some of impact of A and B and would lessen GRC irritaion over
realxations of travel tp PCRC, which would begrouped together with NK and Cuba
Cons: Relaxation of restrictions on NK would irritate Seoul. Elimination of all
restrictions on travel to Cuba could greatly complicate our ongoing efforts to prevent
further erosion of OAS sanctions against Cuba following repudication of these sanctions
by new Allende gov in Chile. Would facilitate contacts between Amreican radical left
and foreign communists.
Step 2: Expedite Travel of Groups of PRC Citizens to US--Recommended
Make public announcement that in furtherance of policy of increasing personal
contacts, USG would expedite issuance of visas to groups of PRC scientists, scholars,
athletes, journalists, commercial reps and others.
Pros: WOUld highlight our desire for greater commo between Chinese and American
peoples and lessen US responsiblity for restricting commo and tfavel.
Cons: GRC would be irritated, especially if PRC officials should be admitted,
e.g. those accredited to Canada. Depending on timing and handling of specific cases,
such action might be interpreted as reflection of weakening US support for GRC, thus
influence future voting in UN. Groups would probalby include some memebefs who are int
intell agents. Therefore, such trips owuldplace greater burden of onr counterint11
agencies, and extra allocations of resourcesmight be required to maintain dequate sur-
veillance.
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.
Exports and Imports
Sterp 1: Ease Export Restrictions
Option A: Accord approx same treatment as for Soviet Union
Pros: Would etalbish approx partiy of treatment for PRC and USSR thought ehrer
would continue to be some discrimination in licensing decisions. Maximizes opportuniti
ties for increased peaceful trade and would remove friction for with allies caused
by air denial of exports from their countries which contain US components or tech.
Cons: WOld present- greater security problems than B since it would expand con-
siderably general license treatment accorded PRC to include US commodities, tech data,
and foreign-made products of US technologies, which, given present level of PRC indus-
trial military development, might be of some strat significance to PRC. However, range
of US uniltaeral controls in effect against USSR would apply to China as well. End-use
and end-user info effective in minimizing security risks in particular export transac-
tions for USSR wouldnot be avialablein case of PRC.
Option B: Relax controls, but retain more restrictions upon PRC than for USSR
Recommended
Issue broad list for General License, but more restricted than treatme
figen USSR, together with specific licensing--Recommended
Pros: WOuld provide greater liberalization of controls than C and therefore have
more pol impcact on PRC. Wuld be of greaer commercial significance than C to uS busi-
ness. Security risks would be minimized by interagency item-by-item review and ælec-
tion of commodites for general license treatment and by careful exam of each license
application eligible for consideration under terms of this option. We would make sig-
nificant step toard briging our controls into closer harmony with those of our allies,
thereby reducing frictions engendered by our denials of applications to export pro-
ducts of US technology or incorporating US components. We cold preserve considrable
maneuverability in that option can be put into effect as complete package or in instal-
latments, as review progresses.
Cons: FU11 implementation wuld require more time than C. Continued US discrimin
tio in favor of USSR in publicshed list of commodities--a sensitive issue to PRC--would
still exist.
Option B: Small Step: Issue limited list for General License, togeehter with speci
fic licensiveing.
Pros: WOXld represent limited but not insignificant steps. wouldnot arouse con-
cern from allies, would minimize security and domestic pol problems, and preserve
considerable maneuverability formaking futrtherconcessions as Chi reactions warrant.
Could be quickly and easilry impelmented. Would constitute signal to PRC and to US
businessmen that US ready to resume limed direct commercial contacts.
Cons: US businessmen would continue to suffer significant disadvantages
vis-a-v-svis their Free Wrold competitors and would find little scope ofr expanding
trade. Since there would still be substantial uS distcrimination gainst PRC in favor c
Soveit Union, these moves wouldprobaby have little positive impact on Chi and their
limited nature could have negative impact.
Step 2: East Import Restrictions
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.
Sizeable Step:
Option A. /Accord approx same treatmntent as for Soviet Union--Recommended
Pros: WOuld give PRC greater incentive to develop trade relations than move only
in export field. By placing our treatment of imports from PRC on same level as USSR
ulld obviate need to administer almost inevitably discriminatory licensing program
for US impoters such as proposed in Option B.
Cons: PRC would be free to export to US wihtout having to import US goods
(although such refusal unlikely given Chi interest in certain US goods). Might distrub
Asian allies who could question continuing US resolve to support their independence.
Option B. Small Step: Permit restricted commecrcial imports from PRC
Pros. REstricted licensing wouldpermit begginnings of commercia imports from Chi
and demonstrate our willingness to exchae goods, while maintaiing limitations in case
PRC refused to purchase American products. Amount to be licensed could be subject for
discussions at Warswa.
CVons: WOUld be somewhat difficult to adminter such program in fashion that woul
be equitable and non-discriminatory for all prospective US importers. Imposition of
quota allocations forpurpose of balancing trade would also be retrograde step in
terms of general trade policy.
Step 3: Significant Export Decision to Approve Sale of Aemrican AC to PRCOORecommende
Pros: Highly visible move which wouldhave favorable impact on PRC. would give
US ac industry foothold in potentially large Chi market for civilian transport ac,
a marek t that Eur and Japanese competitors stand ready to preempt.
Cons: MIght be misinterpreted by other nations as lessening of US determination
to continue COCOM controls, particularly "China Differential." If Export Option C were
adopted, this action would be inconsistent and would crate idifficultires in licensing
other commodities. Would be of concern to GRC.
Step 4: East Dollar Controls
Option A. Sizeable Step: Relax restrictions on use of dolars between PRC and US or
third countries--Recommended
Pros: Would place our financial treatment of PRC on same level as USSR. Facilit
tates direct trade with PRC. WOXld permit US financial institutions to participate
directly in China trade.
Cons. PRC would be free from US control over use of dollars for subversive or
other undeisralbe purposes. Would permit PRC to maintain revserve balances in dollars,
minimizing present risks involving possible devaluation of foreign exchange.
Option B. Small Step Relax restrictions on use of dolalrs between PRC and third
countries only.
Pros. Removal of restrictions on PRC and third-country use of dollars owuld
further reduce extra territorial application of or laws and reduce frictions bwetween
US and third countries engendered by policy which is increasingly difficult foo adminis
ter.
Cond: Might increase pressure on US to unblock Chi assets which have not yet
been vested.
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.
Step 5: EEast Bunkering Controls Recommended
Remove Bunkering Controls, Except for Carriers to NVN, NK and Cuba
Pros: W OULD PERMIT American oil companies to psrticipate in trade now denied
them without altering our controls onvessles going to NVN or NK.
Cons: None.
Step 6: Invite or Propose Exchange of Trade Deletaions--Recommended
Pros: Would be initiative which we could use to show our desire to increase
contacts betwween PRC and US on non-pol level.
Cons: WOUld probaly not be acceptable to PRC at first. Would facilitate PRC
intell collection.
Step 7: Ease Shipping REstrictions
Option A. Sizeable Step:: Permit US carriers to carry cargoes to and from ports in
PRC
Pros:
Would allow American carriers to compete in Chi trade. Would signal tha
we relied on PRC 0 treat our carrier personnel with justice.
Would
Cons: Some Amerfican seamen would inevitably get into grouble in ports where
they couldnot receive consular services. Might also be expected to raise strong ob-
jections of GRC with which we have agd under bilateral civil air agmt not to allow Amer
ican planes to fly scheduled routes into Chi without prior consultation and agmt of
GRC. US air lines now authorized under terms of this agmt to fly to Taiwan would ob-
ject to this move if they thought it would cause GRC to denounce agmt. If GRC did
denounce it now, or , as required by its terms, after year's notice, there would be
no certainty that GRC would permit US carrrs to maintain their current schedules.
Option B. Small Step: Permit US carriers to carry PRC cargoes, but not to Chi--
Recommended
Pros: WOUt фlbase American carriers and remove unneeeded regulations
Cons: GRC might object
Option C. Permit US-owned foreign flag carriers to carry cargoes to and from pts
in PRC--Recommended
Pros: Permits move direct US-PRC commercial contact while minimizing problem of
protection of US citizen crewmen since they normally arenot employed on ucsuch ships.
Eliminates present anomalous situation in which foreign subsidiaries of US firms may
charter foreign flag carriers for the Chi trade but are not permitted to utilize
their own foreign flag carriers.
Cons. Places American-owned carreirs in PRC hands. Wouldhave to be made public
but not necessarily publicized. GRC wo-ldproably object.
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.
Timing Considerations
Option A. Implement recommendations in space stages--Recommended
Pro: Would lessen adverse impact on GRC while we are trying to persaude GRC to
acquiesce in any new approach to Chi rep issue. Would minimize risk of sale of commo-
dities which might have strat signiciance for PRC.
Cons: Would diminish possible favorable impact a combined package might have on
PRC, and would run risk of receiving successive scornful respoes from PRC. Successive
notificiatons are recoms areimpelementedwould repeatedly irritate GRC.
Option B. Implement most recommendations as one package
Pros: WOuldhave maximum favorableimpact on PRC. WOuld get major restrictions out
of theway at one time, avoiding necessity of repeated notirfications to GRC.
Cons: WOud1 proably seriously complicate our efforts to persuade GRC to acquiesc
in any new appraoch to Chi rep isue.
*****
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
105-1
NSDM 105:
Steps Toward Augmentation of Travel and Trade
Between Peoples Republic of China and the United States
February 23, 1971
In response to President's request, and after review based on
NSDM 17 and studies under way pursuant to NSSM 106, USC recom-
mended two steps to facilitate personal contacts by relaxing
restrictions on travel by American and PRC citizens, as well
as steps in 7 areas which would provide basis for development
of more normal commercial relations. All steps can be imple-
mented without new legislation. USC recommendations, and options
considered, with pros and cons, summarized below.
USC Recommendations
Travel
Recommend removal of all passport restrictions on travel to PRC when they expire
on March 15, while continuing them on travel to North Vietnam, North Korea and Cuba.
Justice opposes because it would afford PRC better opportunities for intelligence
acquisition, permit close clandestine contacts between American Maoists, advocates of
domestic violence, and PRC, and make it easier for PRC to recruit sympathetic intelli-
gence agents. Remainder of USC believes potential gains outweigh risks, Because of
Court decisions, and in keeping with our policy since 1969 of granting exceptions to
passport restrictions on travel to PRC for bread categoreis of travelers, barrier has
had little practical effect.
Also recommend public statement offering to expedite visas for groups of visitors
from PRC to US in order to establish our willingness to facilitate on reciprocal basis
flow of persons between two countries. Justice opposes because such groups would
probably include trained subversive agents.
Trade
US has relaxed some of its controls affecting trade between PRC and third coun-
tries. USC recommends we now commence relaxation of our controls on direct Sino-US
trade, eventually to accord PRC approximate parity with Soyiet Union. Closer our
treatment of trade with PRC approaches that applied to Soviet Union, more seriously
our assertions of willingness to improve relations with PRC will be believed, and more
likely it becomes that Peking will eventually respond favorably to our initiatives.
Timing
Trade steps could be accomplished separately or in single package. Latter would
have most favorable effect on PRC, while gradualism runs greater risk of inviting
scornful responses from Peking.
Wents However, implementing these measures on steady phased basis, in undramatic
fashion would minimize adverse effect on Taipei particularly re our ability to influ-
ence GRC on Chirep issue in UN. Timing of steps beyond initial one would depend on
number of considerations, e.g., climate of US-GRC relations and evolution of our Chirep
position. For these reasons, USC makes no recommendation on precise timing after
first step.
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
105-2
In summary, USC recommends approval of all steps below, in deliberately spaced
stages and in undramatic fashion, starting in near future with authorization of direct
export trade, with aim of completing program at or near end-1971.
Exports
Ultimate objective to place exports to PRC on same footing as Soviet Union,
but USC believes it necessary to review experience with more restricted level of ex-
Ports before moving all the way to that goal. Specifically, recommends at this time
authorization of exports to PRC under general license of all commodities currently
under general license to USSR except those which, after item-by-item interagency review
are deemed to be of strategic significance to PRC.
Imports
Recommends that later this year direct commercial imports from PRC be authorized
on essentially same basis as Soviet Union. Important that this move be correlated
with exports.
Aircraft Sales
Recommend decision to permit export to China of used American passenger aircraf
not under COCOM restrictions (of type which have been operating in normal civil use
for more than one year) providing certain strategic equipment on board is first re-
moved Large number of older American aircraft owned by airlines which would like to
sell them to get capital to buy new American aircraft--which would be welcomed by
our industry.
Currency Controls
Recommend relaxation later this year of our currency controls to permit Chinese
use of dollars. Would be important in conjunction with decision to permit direct trade,
especially imports, but could also be put into effect independently.
Bunkering
Recommend changing bunkering controls before end of year (including those on pet-
roleum products of US origin) to permit fueling Chinese-owned or chartered carriers--
surface as well as air-- (except those bound to or from North Vietnam, North Korea or
Cuba) as well as non-communist and Eastern European carriers bound to or from China.
(Would not affect our existing controls on entry of PRC carriers into US ports.)
Trade Delegations
Recommend US propose exchange of trade delegations if circumstances warrant, e.g.:
positive PRC response to our trade relaxation efforts. Justice opposes.
Chinese Port Entry and Cargoes
Recommend steps to permit: 1) US vessels to carry Chinese cargoes between non-
Chinese ports, and 2) US-owned foreign flag vessels to call at Chinese ports. Makes
no recommendation on amending current regulations to permit US vessels and aircraft to
call at Chinese ports at this time.
Notes, however, that decision to permit grain sales to PRC would raise question
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
105-3
of whether to allow more favorable treatment of PRC than USSR by not requiring that
50% be shipped in American bottoms. If we do extend 50% requirement to PRC we might
defeat purpose of permitting sales of grain to PRC because of high shipping costs.
Moreover, regulations would have to be ******* amended to permit US ships to call at
PRC ports.
Options in USC Paper
Travel
Step 1: Travel of Americans to PRC
Option A. Remove all passport restrictions on travel to PRC prior to March 15
Pros: Would be positive gesture which would attract considerable attention
and be viewed as consistent with our desire to improve communication between Chinese
and American peoples. Would put onus for preventing travel of Americans to PRC on
Peking. If appreciable travel developed, would increase our access to intelligence
on China.
Cons: GRC would fear that this relaxation portended further US reconcilia-
tion with Peking at expense of Taipei. GVN and ROK would be concerned. American
tourists in China could not receive USG consular assistance if in trouble. Would
facilitate contact netween PRC and American radical left.
Option B. When passport restrictions are due for renewal March 15, omit PRC
from list of designated countries, leaving North Vietnam, North Korea and Cuba on
list Recommended.
Pros: Same as Option A. Would indicate that US no longer classes PRC with
DRV
,
NK and Cuba and that US considers contacts with Chinese people desirable.
Cons: Would have slightly less impact than Option A; would still provoke
concern by GRC and others, but probably less than A. Would facilitate contact between
PRC and American radical left.
Option C. Drop restrictions on travel to PRC, North Korea and Cuba on March
15, leaving restrictions on travel to North Vietnam.
Pros: Would have some of impact of A and B and would
lessen GRC irrita-
tion over relaxation of travel to PRC, which would be grouped with North Korea and Cuba
Cons: Relaxation of restrictions on North Korea would irritate Seoul. Eli-
mination of restrictions on travel to Cuba could complacate our efforts to prevent
further erosion of OAS sanctions against Cuba. Would facilitate contacts between
American radical left and foreign communists.
Step 2: Expedite Travel of Groups of PRC Citizens to US--Recommended.
Make public announcement that in furtherance of policy of increasing personal
contacts, USG would expedite issuance of visas to groups of PRC scientists, scholars,
athleters, journalists, commercial representatives and others.
Pros: Would highlight Our desire for greater communication between Chinese
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105-4
and American peoples and lessen US responsibility for restricting communication and
travel.
Cons: GRC would be irritated. Depending on timing and handling of specific
cases, might be interpreted as weakening US support for GRC, thus influence future
voting in UN. Groups would probably include some intelligence agents; therefore,
such trips would place greater burden on our counter-intelligence agencies.
Exports and Imports
Step 1: Ease Export Restrictions
Option A. Sizeable Step: Accord approximately same treatment as for Soviet
Union.
Pros: Would establish approximate parity of treatment for PRC and USSR
though some discrimination in licensing decisionswould continue. Maximizes opportuni-
ties for increased trade and would remove friction with allies caused by our denial
of exports from their countries which contain US components or technology.
Cons: Would present greater security problems than Option B since it would
expand general license treatment accorded PRC to include US commodities, technical
data, and foreign-made products of US technologies, which might be of some strategic
significance to PRC. Although US unilateral controls in effect against USSR would
apply to China as well, end-use information effective in minimizing security risks LTV
particular export transactions for USSR wouldnot be available in case of PRC.
Option B. Medium Step: Issue broad list for general license, but more res-
tricted than treatment given USSR, together with specific licensing Recommended.
Pros: Would provide greater liberalization than Option C and, therefore,
have more political impact on PRC. Would be of greater commercial significance than C
to US business. Security risks would be minimized by interagency item-by-item review
and selection of commodities for general license treatment and by careful examination
of each license application. Would bring our controls into closer harmony with those
of our allies, thereby reducing frictions engendered by our denials of applications
to export products of US technology or incorporating US components. We could preserve
considerable maneuverability in that option can be put into effect as complete package
or in installments, as review progresses.
Cons: Full implementation would require more time than C. Continued US
discrimination in favor of USSR in published list of commodities-- a senstive issue to
PRC--would still exist.
Option C. Small Step: Issue limited list for general license, together with
specific licensing.
Pros: Would not arouse concern from allies, would minimize security and
domestic political problems and preserve considerable maneuverability for making fur-
ther concessions as Chinese reactions warrant. Could be quickly and easily implemented.
Would constitute signal to PRC and to US businessmen that US ready to resume limited
direct commercial contacts.
Cons: US businessmen would continue to suffer significant disadvantages
vis-a-vis their Free World competitors and would find little scope for expanding
trade. Since there would still be substantial US discrimination against PRC in favor of
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105-5
Soveit Union, moves would probably have little positive impact on China and their
limited nature could have negative impact.
Step 2: Ease Import Restrictions
Option A. Sizeable Step: Accord approximately same treatment as for Soviet
Union- Recommended
Pros: Would give PRC greater incentive to develop trade relations than
move only in export field. By placing our treatment of PRE imports from PRC on same
level as USSR would obviate need to administer discriminatory licensing program for
US imports such as proposed in Option B.
Cons: PRC would be free to export to US without having to import US goods
(although such refusal unlikely given Chinese interest in certain US goods). MIght
disturb Asian allies who could question continuing US resolve to support their indepen-
dence.
Option B. Small Step: Permit restricted commercial imoprts from PRC.
Pros: Would permit beginnings of commercial imports from China and demon-
strate or willingeness to exchange goods, while maintaining limitations in case PRC re-
fused to purchase American products. Amount to be licensed could be discussed at
Warsaw.
Cons: Would be difficult to administer program so that it would be equitable
and non-discriminatory for all prospective US importers. Imposition of quota alloca-
tions for purpose of balancing trade would be retrograde step in general trade policy.
Step 3: Significant Export Decision to Approve Sale of American Aircraft to
PRC--Recommended
Pros: Highly visible move which would have favorable impact on PRC. Would
give US aircraft industry foothold in potentially large Chinese market for civilian
transport aircraft that European and Japanese competitors K are ready to preempt.
Cons: Might be misinterpreted by other nations as lessening of US determina-
tion to continue COCOM controls, particularly "China Differential." If Export Option C
adopted, this action would be incon sistent and would create difficultires in licensing
other commodities. Would be of concern to GRC.
Step 4: Ease Dollar Controls
Option A. Sizeable Step: Relax restrictions on use of dollars between PRC and
US or third countries Recommended.
Pros: Would place our financial treatment of PRC on same level as USSR.
Facilitates direct ********* trade with PRC. Permits US financai institutions to
participate directly in China trade.
Cons: PRC would be free from US control over use of dola lrs for subversive
or other undesirable purposes. Permits PRC to maintain reserve balance in dollars
minimizing present risks involving possible devaluation of foreign exchange.
Option B. Small Step: Relax restrictions on use of dollars bewteen PRC and
third countries only.
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Pros: Would further reduce extraterritorial application of our laws and
bed
reduce frictions between US and third countries engendered by policy which is increas-
ingly difficult to administer.
Cons: Might incrase pressure on US to unblock Chinese assets which have
not yet been vested.
Step 5: Ease Bunkering Controls--Recommended
Remove Bunkering Controls, Except for Carriers to North Vietnam, North Korea
and Cuba
Pros: Would permit American oil companies to participate in trade now
denied them without altering our controls on vessels going to North Vietnam or North
Korea.
Cons: None.
Step 6: Invite or Propose Exchange of Trade Delegations--Recommended
Pros: Would be initiative which we could use to show our desire to increase
contacts bewteen PRC and US on non-political level.
Cons: Would probably not be acceptable to PRC at first. Would facilitate
PRC intelligence collection.
Step 7: Ease Shipping Restrictions
Option A. Sizeable Step: Permit US carriers to carry cargoes to and from
ports in PRC.
Pros: Would allow American carriers to compete in China trade. Would sig-
nal that we relied on PRC to treat our carrier personnel with justice.
Cons: Some American seamen would inevitably get into trouble in ports where
they could not receive consular services. Could expect strong objections from GRC
with which we have agreed under bil steral civil air agreement not to allow American
planes to fly scheduled routes into China wihtout prior consultation and agreement of
GRC. US airlines now authorized under terms of this agreement to fly to Taiwan, would
object to this move if they thought it would cause GRC to denounce agreement. If GRC
did denounce there would be no certinty that GRC would permit US carriers to maintain
their current schedules.
Option B. Small Step: Permit US carriers to carry PRC cargoes, but not to
China Recommended.
Pros: WOuld please American carriers and remove unneeded regulations.
Cons: GRC might object.
Option C. Permit US-owned foreign flag carriers to carry cargoes to and from
ports in PRC--Recommended.
Pros: Permits more direct US-PRC commercial contact while minimizing problem
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105-7
of protection of US citizen crewmen since they normally are not employed on such ships.
Eliminates present anomalous situation in which foreign subsidiaries of US firms may
charter foreign flag carriers for the China trade but are not permitted to utilize
their own foreign flag carriers.
Cons: Places American-owned carriers in PRC hands. Would have to be made
public.
GRC would probably object.
Timing Considerations
Option A. Implement recommendations in sanced stages--Recommended.
Pros: Would lessen adverse impact on GRC while we are trying to persuade
GRC to acquiesce in any new approach to Chirep issue. Would minimize risk of sale of
commodities which might have strategic significance for PRC.
usued
Cons:
diminish possible favorable impact a combined package might
have on PRC, and run risk of receiving successive scornful responsee from PRC. Suc-
cessive motifications as recommendations are implemented would repeatedly irriatte GRC.
Option B. Implement most recommendations as one package.
Pros: Maximum favorable impact on PRC. Would get major restrictions out of
the way at one time, avoiding necessity of repeated notifications to GRC.
Cons: Seriously complicate our efforts to persaude GRC to acquiesce in any
new approach to Chirep issue.
(Source: Memo for President from USC Chairman Irwin, February 23, 1971, S/Sensitive,
#26167; USC Paper: "Travel and Trade with Communist China", February 22, 1971, S/
Sensitive, U/SM 91; Letter to USC Staff Director Hartman from DepAttyGeneral Kleindiest,
February 12, 1971, S)
March 1-3, 1971
Defense and Commerce changed their positions on trade with PRC.
They had agreed in USC with State recommendation that restric-
tions on trade with PRC be reduced to level of those on trade
with USSR as soon as practicable. However, subsequently notified
HAK of their view that we should not set in advance policy of
bringing trade controls with China in line with USSR. Agreed,
however, to placing of individual items under general license
for direct export to PRC only after interagency review to deter-
mine if they are of strategic significance.
(Source: Letter to HAK from DepSecDefense Packard, Marich 1, 1971, S, #26167; Letter
to HAK from AsstSecCommerce McLellan, March 5, 1971, S, #26482)
March 1971
President approved non-extension of US passport restrictions on
travel to PRC after they expired on March 15, on basis of position
of State, Defense and others, over opposition of Justice.
(Source Memo for President from H AK, March 25, 1971, S, #26167)
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March 25, 1971
HAK submitted Memo to President breaking USC proposals into
three segments which could be carried out sequentially after
assessment of results obtained following each of preceding seg-
ments. (Noted President prior approval of non-extension of
passport restrictions after March 15, which was submitted as
part of USC recommendations.)
Group I -- For Implementation Within the Near Future
Would show significant movement in direction of easing travel/trade restrictions
while not antagonizing or alarming GRC unduly nor complicating relations with USSR.
Entry of Chinese. Following expiration of restrictions on US ssports,
USC recommended Public statement by USG offering to expedite visas for groups of
visitors from PRC to US. Justice opposes because it would afford PRC better opportuni-
ties for intelligence acquisition, permit close clandestine contacts between American
Maoists, advocates of domestic violence, and PRC, and make it easier for PRC to recruit
intelligence agents. Commerce favored increased travel as necessary to exploit commer-
cial opportunities. State, Defense and others felt American people sufficiently resi-
lient to resist any added subversive burdens. Very few Chinese likely to apply.
Currency Controls. Relaxation of currency controls to permit Chinese use of
dollars would be essential in conjunction with decision to permit direct trade witts
China bu could also be put into effect independently.
Bunkering. USC recommends ending of restrictions on American oil companies
providing bunkers except on Chinese-owned or chartered carriers bound to or from North
Vietnam, North Korea or Cuba. Covers ships as well as planes, but would not affect
existing controls on entry of PRC carriers into US ports.
Shipping. Recommends graing permission to US vessels to carry Chinese cargoes
between non-Chinese ports, and US-owned foreign flag vessels to call at Chinese ports.
(Foregoing moves would inspire little or no reaction from GRC and USSR. Main
GRC objection would be readmission of Communist China into NN US. Totality of moves
would bother GRObut probably not to point of real trouble. Sovies would be suspicious
of our intent and suspect some behind-the-scenes US-Chinese contacs, but are not likely
to make much of issue.)
Trade. More complex. USC recommends we commence relaxation of controls on
direct trade between US and China. Observes that "the closer our treatment of trade
with PRC approaches that applied to Soviet Union, the more seriously our assertion
of willingness to improve relations with PRC will be believed and the more likely it
becomes that Peking will eventually respond favorably to our initiatives." Defense
and Commerce dissent; take position that we should not set in advance policy of bringing
our trade controls with China into line with USSR. Public policy of placing China trad
on par with Soviet trade would be galling to both GRC and Soviets. Soviets would take
equal treatment as intentional slight and would profess to believe that signifies US
intentions to go further in political field. Would not accept explanation that mea-
sures would be in US commercial interest. GRC would view putting Chinese trade on
same basis as USSR, when added to totality of other moves in Group I, as indicating
US intention of downgrading GRC interests in favor of improving relations with PRC.
GRC would probably lodge diplomatic proptest, but also might refuse to cooperate in
other matters of joint concern such as Chinese representation.
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Nevertheless, recommendation for commencing relaxation of controls on direct
trade was unanimous, and upshot was to TEAVE agree on approach favored by Defense and
Commerce: to place individual items under general license for direct export to PRC
only air er interagency review to determine if they are of strategic significance. No
material adverse reaction would be anticipated from either USSR or GRC, although pro
forma protest from latter could be expected.
Once direct trade of limited nature on the books, USC. would then favor direct
imports, from China of similar and correlated limited nature.
Group II
Reasonable period after implementation of Group I and following evaluation of
resulsts and PRC, GRC, Soviet reactions, USC would report effect of these moves and
request approval to implement additional moves below. In these moves, we would be
going beyond steps of limited and quasi-symbolic nature and working toward development
of substantial two-way trade.
Exports, Approve export to PRC of all commodities currently under general
license to USSR except those deemed to be of strategic significance to PRC.
Imports. Authorize direct commercial imports into US from PRC on essentially
same basis as Soviets in manner correlated with allowing direct exports.
Aircraft Sales. End restrictions against sale by XX American and foreign airlines
of older American civil aircraft not under COCOM restrictions, on case-by-case basis,
after stirategic equipment removed Would provide airlines with capital to buy new
American aircraft, which would be much welcomed by industry.
With Group Il moves we would be coming close to placing trade with China and
USSR on much the same basis, and both Soviets and GRC would be disturbed. On balance,
they would probably live with situation, though we could anticipate strong protest from
GRC coupled with difficulty in obtaining cooperation on other matters. I we did
succeed in getting their cooperation, price would be considerably higher than otherwise.
Question of sale of older American civil aircraft to China could become active
issue, since Pakistan International Airways is attempting to dispose of some Boeing
720s to China. Issue, if it arises, could be handled as separate item from other steps
with fewer repercussions and problems.
Group III
Reasonable period after implementation of Group Il, USC would report effect of
these moves and request approval to implement final group of stres. These would make
it evident that we would be willing to go considesable distance in improving relations
with Communist China and, to this end, would be prepared to accept large measure of
Soviet and GRC displeasure.
Trade Delegations. Recommends authorization of proposal to PRC to exchange
trade delegations if circumstances warrant. Justice opposes for same reasons as travel.
Chinese delegation, would, by nature of regime, be official one and ours would probab-
1y assume something of official character in public eye.
Grain Sales. USC notes that decision in export field to permit grain sales to
PRC
or importer of grain would raise question of whether to allow more favorable
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treatment of PRC than USSR by not requiring that 50% be shipped in American bottoms.
I
we extend 50% requirement to PRC, we might defeat purpose of permitting sales
because of high shiping costs. Begualations would have to be amended to permit US
ships t call at Chinese por ts.
Waiving 50% shipping requirement would constitute more favorable treatment for
China than for USSR in historically sensitive area and might be misunderstood politi-
cally abroad. Longshoremen and other unions have opposed any relaxation of shipping
requirement for USSR; would be at least as vociferous against Communist China. Unions
would maintain opposition against USSR if we were to relax on both to avoid discrimina*
tion in favor of China.
This step would provoke major domestic political battle. Since previous re-
laxations would have placed trade with China and USSR under approximately same level
of restrictions, see no need to allow PRC more favorable treament by exempting grain
exports from 50% American botton shipping requirement. However, Agriculture vigorously
favors this move.
If maintaining 50% requirement disapproved, should consider amending regulations
to permit US ships to call at PRC ports which is necessary, in view of 50% requirement,
to make grain sales credible possibility and thereby avoid legitimate PRC claim that
moves are a sham.
Strong adverse reaction could be anticipated from USSR and GRC to Group III steps
Soviets would see more favorable treatment for China re requirements for using American
ships as indicating US attached higher vaue to good relations with PRC than with USSR.
Selling grain on same terms would mt cause as much reaction but Soviets would still be
suspicious that our motives were political. Even if attempt to sell grain came to
nothing, Soviets would mark it as sign of change in US attitude.
GRC would focus first on official quality of proposed trade delegations, seeing
in them US desire to move toward diplomatic relations with Peking. Grain sales and
shipments to China on terms more favorable than those granted USSR would signify same
thing to GRC. Since GRC would assume as corollary US disposition to bargain away its
interests, we would need to consider possibility of severe crisis in US-GRC relations.
We might not be able to count on GRC's past practice of backing away from extreme pxx
positions which it threatens to take.
Recommendations:
1) Approve implementation of steps outlined in Group I.
President initialled "Approve"
2) Authorize HAK to inform USC that further steps proposed will be considered
only after due consideration of results gained from Group I steps, including assess-
ment of reactions of PRC, GRC and USSR.
President initialled "Approve"
(Source: Memo for President from HAK, March 25, 1971, S, #26167; Memo for HAK from
ASC/Holdridge/Bergsten/Sonnenfeldt, March 18, 1971, S, #26167; Memo for HAK from NSC/
Holdridge, March 21, 1971, S, #26167)
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105-11
April 13, 1971
NSDM 105: Steps Toward Augmentation of Travel and Trade
Between the Peoples Republic of China and the United
States
President has reviewed USC recommendations on steps to increase
personal and commercial contacts between PRC and US and has
directed following moves be undertaken:
Issuance of public statement offering to expedite visas for groups of
visitors from PRC to US;
Relaxation of currency controls to permit Chinese use of dollars;
Ending restrictions on American oil companies providing bunkers except for
Chinese owned or chartered carriers bound to or from North Viennam, North Korea or
Cuba. This relaxation covers ships as well as planes, but wouldhot affect existing
controls on entry to PRC carriers into US ports.
Granting permission to US vessels to carry Chinese cargoes between non-Chinese
ports, and for US-owned foreign flag vessels to call at Chinese ports.
Commencement of relaxation of controls on direct trade between US and Ehina
by placing individual items under general license for direct export to PRC after
item-by-item interagency review to deermine if they are of strategic signif iance.
USE to @etermine which items should be placed on gneral license; should forward report
within 30 days requesting approval of determinations. Upon commencement of Imited
direct exports, direct imports from China of siilar and correlated nature will be
allowed
President has directed USC review and report to him after four months results of
steps taken. Report should include assessment of reactions to steps by PRC and GRC.
President will then determine whether implementation of additional steps recommended
by USC may be warranted.
(Source: NSDM 105, April 13, 1971, Secret, signed by HAK; addressees: SecState,
SecDefense, DCI, Attorney General; CC: SecTreasury, SecCommerce, Chairman JCS,
Director USIA)
April 14, 1971
President announced the new policy approved in NSDM 105.
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.
Letter to HAK
From: Packard
Mar 1, 1971
2
S
#26167
Changes position per discussion above.
3
Letter to HAK
3-5-71, #26482
From: AsstSecComm for Dom&Intl Business McLellan
S---same as above
4
Memo for HAK
From: Hoddridge, Bergsten and Sonnenfeldt
March 18, 1971
S
#26167
Steps Toward Augmentation of Travel and Trade Between PRC and US
USC has completed study requested by Pres. (NSSM 106, DM 17)
Thorough doc fully consistent with Pres ForPolReport on subject and alert to
advantages/disadvahaages of eithercontinued guadualism or package move in area.
With exception of Justice opposition to any increase in travel by Americans and
Chi between two countries, and Def and 'ommerce oppoition to setting as policy
putting of trade with Chi on approx same level as trade with USSR, all USC members
agreed on all recoms and on statements of options for Pres. These are as follows:
--Travel. To end restric on travel to PRC when regs must be extended on March
15 (already implemented) and publicly announce our willingness to admit Chi
visitors. Justice opposed because it would afford PRC better opportunities for
intel acquisition, permit close clandestine contacts bewween Am Maoists, advo-
cates of domestic violence and PRC, and make it easier for PRC to recruit intel
agents. Formal CI position faovrs increased travel between US/Chi as XAKX
means if inserting its agents into Chi, although Gen Cushman did not dupport
this at USC mtg. Commerce favored increased travel as necessary to exploit
commercial opportunities. State/Def and others felt fabric of American society
sufficiently strong to withdtand additional strains which might be put on it by
ending restrictions.
Trade. Draft which came before USC from WG favored reducing restrictions
on trade with PRC down to level of those on trade with USSR as soon as practicable
State virogously defended need for policy decision along taese lines. Def and
Commerce dissented saying that each proposed decision to reduce restrictions
should be examined separately on basis of experience and info derived from pre-
ceding reducs.
Specifics of traveland trade relaxations, to be implemented in phases, contained
in your memo to Pres. Your memo lays out proposed phased actions and insures that
Pres will be consulted before each group of actions is undertaken.
Shoudd we decide to adopt some new approach to Chirep at UN, such as dual repre-
senaation or universality, we would benefit from these initiatives by allaying
suspicions that we were trying to devise yet another set of tactics to keep
Peking out of UN. "limination of trade/travel restr remaining from Korean War
would remove suspicions about sincerity of our intentions to bring Peking into
world community viz UN and therefo re strengthen our ability to gain vitally-
needed supporters for Taipei's continued participation.
As same time, as we get into difficult negos with Chian Kai-shek over Chirep
tactics later this spring, he will certainly put pressure on us not to undertake
any further initiatives toward Peking on grounds that these would give "weong
signal" to wavering GRC supporters about earnestness of US support, and Chiang
will find receptivity for this view in some parts of USG
USC, including Def and Comm, unanimously recom opening of direct trade with PRC.
In addition, State argued for policy decision to put Chi on approx parity with
USSR under our trade restr as evidence of our desire to lessen tensions with
PRC. Agric favored such policy decision on commercial grounds.
Packard and AsstSecComm for Dom and Intl Buseness McLellan have written you changin
Def and Comm position re relaxation of controls on trade with PRC. These changes
in position do not alter options presented to Pres in your memo. Def/Comm posi-
tions are identical to your Group I Recom Option:
"Approve placing of indi Reproduced the Richard Nixon Presidential Library license for direct export
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
to PRC only after interagency review to determine if they are of strat significan
Holdridge and Levin were both at USC meeting and noted Def/Comm positions as
originally stated in Irwin memo co ering USC/M 91 It is tribute to vigor of Def
bureaucracy that they have been able to get both Packard and McCellan to reverse
their agreement to State's request that Pres be asked to decide that putting
trade with Chi on approx same level as USSR is desirably policygoal.
Letters have been prepared for your sig assuring Packard and McLellan that their
positions will be accurately presented to Pres.
Recom: S1gn memo to Pres and letters to Packard and McLellan
Memo for HAK
From: Holdridge
5
March 21, 1971
S
#26167
Same subject
At Tab is memo from you to Pres redrafted in accordance with your instructions.
Memo to Pres
From: HAK
March 25, 1971
6
S
#26167
Steps Toward Augmentation of Travel and Trade between PRC and US
As you requested, I have asked USC to produce some suggested changes in US trade/
travel gegs re PRC with view toward implementing addition relaxations in present
controls. Steps woud be intended to further your policy of broadening commo
between US and PRC by removing obstacles to personal and commercial contacts.
USC developed large package of proposals which set workable course in direction
you desire. Did so not in expectation of any substantial immediate increases
in trade/travel, but because adoption of proposals would show genuineness of
our desire to improve relations and possibly eventually devèlop aignificant
trade. No naw legis or negos with Chi required.
At same time, USC proposals would, if fully implemented, put severe strain on our
relations with GRC and perhaps cause crisis in US-GRC relations. Would also be
implications for relations with USSR. Appears that balance will need to be
struck between furthering your objectives re PRC on one hand and desirability
of minimizing US-GRC strains and keeping watch on Sov reactions on other. Ques-
tions of timing and extent to which we should go in approaches to Peking will
need to be carefully considered.
Have broken down large package from USC into three segments which we could carry
out sequentially after assessment of results attained including PRC, GRC, Sov
responses) following each of preceding segments. After assessing results, we
could then œnsider whether to go on to next eggment.
(Actually, there wre originally four segments, of which first was non-extension
of US passport restric on travel to PRC after they expired March 15. You have
already approved this step on ais of position put forward by State, Def and
obhers--over opposiion of Justice--that fabric of Am society was strong enough
to resist additional strains which removal of passport restr might put on it via
increased contacts between US radicals and PRC intel agents.
Group I - For Implementati 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.
Purpose in thie Group to show significant movement in direction of easing travel/
trade restr while not going so far as to antagonize or alarm GRC unduly nor
complicate relations with USSR.
Entry of Chinese. Following expiration of restr against using US passports
to travel to CC, in order to establish willingness to facilitate on reciprocal
basis flow of people between two countries, USC recom public statement by USG
offering to expedite visas for groups of visitors from PRC to US. This would
implement your refs to removing needless obstacles to broader opportunities for
contacts in XX your ForPolRept. Justice opposes because it would afford PRC
better opportunities for intel acquisition, permit close clandestine contacts
between Am Maoists, advocates of domestic violence and the PRC, and make it easier
for PRC to recuit intel agents. Comm favored increased travel as necessary to
exploit commercial opport. Staee, Def and others felt Am people sufficiently
resilient to resist any added subversive burdens which presence of CC travelers
might introduce. Very few Chi likely to apply in foreseeable future.
--Currency Controls. Relax of currence controls to permit Chi use of $ would
be essential in conjunction with decision to permit direct trade with Chi but
could also be put into effect independently.
-Bunkering. USC recoms ending of restr on Am oil companies providing bunkers
except on Chi owned or chartered carriers bound to or from NVN, NK or Cuba.
Covers ships as well as planes, but would not affect existing controls on entry
of PRC carriers into US ports.
--Shipping. Recoms granting permission to US vessels to carry Chi cargoes
between non-Chi ports, and US-owned for flag vessels to call at Cni ports.
All of foregoing moves involve relatively minor adjustments on our part and would
inspire little or no reaction from GRC and USSR. Main GRC objection would be re
admission of CC into US and we could anticipate official GRC expression of con-
cern at Amb level. Totality of moves would bother GRC but probably not to point
of real trouble. Sovs would be suspicious of our intent and suspect some behind-
the-scenes US-Chi contacts, but areà not ližěly to make much of issue out of
individual moves.
Theee is, however, more complex proposal in Group I which deserves special attn:
--Trade. USC recoms we now commence relax of controls on direct trade between
US and Chi. With Def and Comm dissenting, it observes that The closer our treat
ment of trade with PRC approaches that applied to SovUn, the more seriasly our
assertiond of willingnes to improve relations with PRC will be believed and
the more likelyit becomes that Peking will eventually respond favorably to our
initiatives. " Def/Comm take position that we should not set in advance policy
of brining our trade controls with Chi into line with USSR. In fact, public
policy of placing China trade on par with SOV tradd would be galling to both GRC
and Sovs. Sovs would take ęqual treatment as intetional slight and would profes:
to belive that signified US intentions to go further in pol field. Even though
many of trade measures would obviously be in US comm interest, Sovs would not a
accept such explanations. GRC view would be that stated policy of putting Chi tr:
trade on same pasis as USSR, when added to totality of other moves in Group I,
indicated defmnite US intention of downgrading GRC interests in favor or im-
proving relations with CCE. In formal sense, GRC respase would probably be to
lodge diplo protest, but we might in addition expect GRC non coop in other mat-
ters of joint concern such as Chirep.
Nevertheless, recom for commencing relax of controls on direct trade was unani-
mous, and upshot was to leave as accepted course approach favored by Def/Comm:
to place individual items under general license for direct export to PRC only
after ineragency review to determine if they are of strat significance. No
maeerial adverse reaction would be anticipated from either USSR or GRC, although
pro forma protest from latter could be expected.
Once direct trade of ltd Reproduced at the Richard Nixon Presidential Library ld then favor direct imports
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
from Chi of similar and correlated ltd nature.
Group II
Reasonable period after implementation of Group I and following evaluation of
results and PRC, GRR, Sov reactions, USC wold report to you effect of these moves an
and request approval to implement additional moves set forth below. In making
these moves, we would be going beyond steps of ltd and still quasi-symbolic
nature and working toward devel of substantial two-way trade. with Group I steps
already on books, we would be making plain that relationship we seek with Chi
is one of substance and not just show.
--Exports. Approve export to PRC of all commodities currently under general
license to USSR except those deemed to be of strat significant to PRC.
--Imports. Authorize direct commer imports into US from PRC on essentially
same basis as Sov in manner correlated with allowing direct exports.
-Aircraft Sales. End restr against sale of Am and for airlines of older
Am civil ac not under COCOM restr, on case-by-case bais, after strat equipment
removed. Would provide airlines with capital to buy new Am ac--which would be
mucn welcomed by industry.
With Group II moves we would be coming close to placing trade with China and USSR
on much the same basis, and both Govs and GRC would be disturbed. On balance
they would probably lime with situation, though we could anticipate strong pro-
test frm GRC coupled with difficulty noted in obtaining coop on other matters.
If we did succeed in getting their coop, price would be consideably higher than
otherwise.
Question of sale of older Am civil ac to Chi cold become active issue, since
PakIntlAirwaysis attempting to dispose of some Boeing 720s to Chi. Issue, if it
arises (has been no firm Chi offer) could be handled as separate item from
other steps with fewer repercussions and problems.
Group III.
REasonable period after implementation of Group II, USC would report to you effect
of these moves and request approval to implement final group of steps. These
would make it evident that we would be wiling to go considerable distance in
improving relations with CC and to this end would be prepared to accept large
measure of Sov and GRC displeasure.
-Trade Delegations. Recoms authorization of propoal to PRC to exchange trade
dels if circumstances warrant. Justice opposes for same reasons as travel.
Chi del would by nature of regime be official one and ours would probably assume
something of official character in public eye.
-Grain Sales. USC notes that decision in export field to perm t grain sales
to PRC--major importer of grain--would raise question of whether to allow more
favorable treatment of PRC than USSR by not requiring that 50% be shipped in Am
bottoms. X If we do extend 50% requirement to PRC, we might defeat purpose of
permitting sales becaus of high shipping cosss. Regs would hav to be amended
to permit US ships to call at Chi ports.
Waiving 50%shipping requiemenw would constitute more favorable treatment for
Chi than for USBR in hidtorically sensitive area and might be misunderstood
pol abroad. Longshoremen and one r unions have vehemently opposed any relax of
shipping requirement for USSR; would be at least equally vociferous against CC
for both comm and ideological reasons. Unions would maintain opposition against
USSR if wewere to relax on both to avoid discrimination in favor of Chi.
With this step you would be taking on major domestic pol battle. Since previous
relaxations would have placed trade wih Chi and USSR under approx same level of
restr, see no need to allow Reproduced at the Richard Nixon Presidential atment by exempting grain
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
exports from 50% Am bottom shipping requirement. Howver, Agric vigorously favors
this move.
If you disapproved waiving 50% requirement, you would wish to consider amending
regs to ermit US ships to call at PRC ports, which is necessary in view of 50%
requirement to make grain gsales credible possibility and thereby avoid legitimate
PRC claimes that moves are a sham.
Strong adverse reaction could be anticipated from USSR and GRC to Group III steps.
From Sov standpont, more favorable treatment for Chi than USSR re reqiemts for
using Am ships would indicate US attached higher value to good relations with
Chi than with USSR. Selling grain on same terms would not caue as much reaction
but even in this case Sovs would be suspicious that our motives were pol rather
than econ. Even if attempt to sell grain came to nothing, Sovs would mark it
down as sign of change in US attitude.
GRC would focus first on official quality of proposed trade dels, seeing in them
US desire to move taward diplo relations with Peking. Grain sales and shipments ti
to Chi on terms more varoable than those granted USSR would signify same thing to
GRC. (Grain sales alone would not be regarded differently from any other
non-strat trade item, however.) Since GRC would assume as corollary US dispositio
to bærgain away its interests, we would need to take into our calculus possibility
of severe crisisin US-GRC relations. Management of such crisis could prove very
difficult and we might not be able to count on GRC's past practice of backing
away from extreme positions which it threatens to take.
Recom:
Approve implementation of steps outlined in Group I
RN initialled Approve
Authorize me to inform USC that further steps proposed will be considered only
after due consideration of results gained from Group I steps, including assess-
ment of reactions of PRC, GRC, USSR
RN initialled Approve
Note: Copies of letters to Packand and McLellan not in package in DM folder.
However, profixex note from Kennedy indicates HAK did not sign them but probably
intended to and suggested Haig sign for HAK, and profile sheet notes " HAK sgnd
ltrs, 3-25
Note to Kennedy/Holdridge
From: Haig
Prepare impelemting directive,asan the Richard Nixon Presidential Library
DECLASSIFIED This document has been reviewed pursuant to Executive Order 13526 and has been determined to be declassified.
Memo for Pres
From: ChUSC Irwin
Feb 23, 1971
S/Sensitive
#26167
7-pp cover memo enclosing 35-pp report
Telegram Pres announced new policy April 14
ls
8
*****
Memo to HAK
From: Peter M. Flanigan
April 5, 1971
S
#27336
Major problem of domestic airlines which are currently in dire financial strains
is excess capacity. To some extent made up of older 4-engine jets which cannot
econ be retrofitted tomeet modern air pollution standaræds.
One of major potential markets fot these planes could be CommChi
In light of recent Pres statement against expansion of trade with Comm countries,
could exception be made under which thse surplus ac could be sold to CommChi.
Benefits would be a) great financial relief to hard-pressed airlines and b) big
step toward noise and exhaust pollution control. May I have your answer in very
near future as this is immediateproboem.
Memo for HAK
From: Bergsten
April 14, 1971
S
#27336
Sale of AC to China
Notes Flanigan memo. This is one OS issues included in your memo to Pres and whic
is not to be pursued at this time as general matter.
Such sales could be effected if category were approved for general license
after interagency review called for in DM 105. Could also be effected viz
specific requrest for specific saels even if category not approved for generak
license. Memo for Flanigan suggests he might want to raise these possibilities
as specific step separate from group" measuresnow envisaged.
Recom: Sign memo to Flanigan
Memo to Flanigh
From: HAK
April 19, 1971
S
#27336
Sale of Older Jet Planes to China
You asked about possibility of selling Am second hand jets to Chi. This genera
subject included in package to Pres on relax of regs on and travel between US
and Chi, on which he has just made decisions and which was announced April 15.
DM xxxxxx 105 attached.
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.
Package suggested three groups of steps Pres could take. Sale of planes included
in second step, which would not be implemented until after we had assessed reac-
tions to first step over period of several months.
However, you might wish to suggest that sale of older planes be judged on its
own merits, including commercial considerations you cite, which might be possible
with fewer pol overtones than if it were xxx done as part of additional broad
package as now envisaged. I could conceive of such planes being approved for
general license under procedures cited in Divi 105 or via specific licenses on
ad hoc basis. In either case, fundamental consideration would have to be out
overall policy effort toward Chi and how such sales would fit into it.
Memo to HAK
From: Ernest Johnston
May 6, 1971
S
#28287
May 7 Agency Announcements on Implementationof Some Parts of the Pres ChiDecisions
In memo of May 3, Bergsten informed you Sec Connally had instructed Treas to
postp ne until his return its propsed announcement last Sat on freeing of Chi
foreign assets controls. This is one of steps to impelemt Pres decisions.
Connally now prepared to go ahead and Treas plan announce May 7. On same day
Comm and Trans will announce change S! in regs on bunkering, shipping and cargoes.
T. eBe are elements which did not need further referral to Pres. Cable is going
to Asian posts prior to agency announcements.
DM does, however, require that USC prepare for Pres series of options on items
to be allowed in US/Chi export/import trade. These will require furh er Pres
deci sions prior to implæntaion. Paper should arfive in next few days.
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.
NSDM 105
April 13, 1971
HAK
S
Steps Towards Augmentation of Travel and Trade Between the People's
Republic of China and the United States
SecState
SecDef
DCI
AttyGen
CC: SecTreas
SecComm
Ch, JCS
Dir, USIA
Pres has reviewed recommendations forwarded by USC on steps to increase
personal and commercial contacts between PRC and US and has directed
following moves be undertaken:
--Issuance ofpublic statement offering to expedite visas for groups
of visitors from PRC to US;
--relaxation of currency control to permit Chinese use of dollars
--Ending restrictions on American oil companies providing bunkers
except on Chinese owned or chartered carriers bound to or from North
Vietnam, North Korea or Cuba. This relaxation covers ships as well as
planes, but would not affect existing controls on entry to PRC carriers
into US ports.
--Granting permission to US vessels to carry Chinese cargoes between
non-Chinese ports, and for US-owned foreign flag vessels to call at
Chinese ports.
--Commencement of relaxation of controls on direct trade between US
and China by placing individual items under general license for direct
export to PRC after inem-by-item interagency review to determine if they
are of strategic significance. USC to be charged tin with xxx responsi-
bility of determining which items should be placed on general license,
and should forward report within 30 days requesting approval of deter-
minations. Upon commencement of limited direct exports, direct imports
from China of similar and correlated nature will be alloed.
Pres has directed USC review and report to him after four months
results of steps taken. Report should include assessment of reactions
to steps by PRC and GRC. Pres will then determine whether implementation
of additional steps recommended by USC may be warrented.
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.