NSDD 226 Machine Tools and National Security

CONFIDENTIAL CONFIDENTIAL THE WHITE HOUSE WASHINGTON SYSTEM II 90391 NATIONAL SECURITY DECISION May 21, 1986 DIRECTIVE NUMBER 226 MACHINE TOOLS AND NATIONAL SECURITY (U) Statement of Policy It is the policy of the United States to maintain a broadly based deterrent against different types of conflict. In this regard, the U.S defense industrial base is a critical component of conventional and strategic deterrence. (U) Section 232 Study On March 17, 1986, the Secretary of Commerce forwarded a report on the effect of machine tool imports on the national security that was prepared under Section 232 of the Trade Expansion Act of 1962, as amended. This study was based on current Administration national security policy and included analysis developed by an interagency task force. (U) The Secretary of Commerce, in consultation with the Secretary of Defense and other relevant Administration officials, indicated that the machine tool industry is a small yet vital component of the U.S. defense base. The Secretary of Commerce further indicated that high levels of imports can erode U.S. capabilities to manufacture critical machine tool product lines. (U) I have reviewed the Secretary of Commerce's report on the impact of imports of machine tools on the national security and considered the information on this issue presented at the National Security Council Meeting. (U) Based on this information I have decided that the following course of action shall be implemented: - A specific 232 finding will be delayed for six months. - In six months time, based on how the U.S. domestic industry is performing and the nature of imports, a finding will be made. (U) - Voluntary Restraint Agreements will be sought with Taiwan, West Germany, Japan and Switzerland on machining centers, numerically controlled (NC) lathes, non-NC lathes, non-NC punching and shearing, NC punching and shearing, and milling machines. A breakdown of the levels to be sought through discussion and consultation with the exporting countries are as follows (VRA levels are based on the percent of units shipped vis-a-vis the total U.S. market) : CONFIDENTIAL COPY / OF 14 COPIES CONFIDENTIAL