Foreign Relations of the United States, 1964–1968, Volume VIII, International Monetary and Trade Policy

360. Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Bator) to President Johnson¹

Washington, May 15, 1967, midnight.

SUBJECT

• Talking Points on Kennedy Round for Leadership Breakfast (Tuesday, May 16, 1967)²

I want to talk with you briefly this morning about the Kennedy Round. As you know, our negotiators came up with a package late last night—after several days of round-the-clock bargaining.

In 1962, under your leadership, the 87th Congress took the most creative step in the history of international trade. The Trade Expansion Act authorized the President to lead the Free World into a new era of economic partnership. It authorized him to cut our tariffs in half wherever we could get our partners to give us equal benefits in return. I can assure you that, before Bill Roth initialed this bargain, I went over the package item by item, offer by offer—together with the Vice President and my senior advisers in trade matters. I became convinced—as were all my advisers—that the overall bargain is a good one for the United States and a good one for the world.

In terms of the purposes of the TEA:

• —it will stimulate economic growth at home;
• —it will strengthen economic relations with the rest of the world;
• —it will maintain our economic strength and vitality in the cause of freedom.

I cannot yet go into detail—much work remains to be done—but let me give you a few highlights:

In industry, with a few exceptions, we are talking about an average tariff cut of more than 30%—by far the largest ever negotiated. We will be giving our industrial plant, the largest and most efficient in the world, access to markets several times the size of our own.

In agriculture, the package includes a revolutionary Grains Agreement, and substantial tariff concessions on a wide variety of farm products. The Grains Agreement will guarantee a high international trading price for our wheat exports. And, for the first time, it will require other rich nations to join us in providing food aid to the poor countries. It will also leave room for more U.S. wheat in the commercial markets of the world.

We have had some very hard bargaining. Some will say we should have done better. Others will say that we shouldn’t have done this at all.

However, it was my judgment when I agreed to let Bill Roth go ahead yesterday that—in the end—the Kennedy Round will be judged a great achievement:

• —We will, in one move, have done more to promote the free and efficient exchange of goods in the Free World than any Administration, or any Congress has ever been able to do.
• —Beyond the specific benefits of the tariff cuts, this package will go far to guarantee the kind of economic world most profitable to us. We export nearly $30 billion in goods and services every year—more by several billion than we import. We have an enormous stake in maintaining orderly rules of world trade. Each of the last eight Administrations tried to strengthen and liberalize those rules. We can do more now for this cause than they have done in 35 years of effort.

And we must all keep in mind the alternative. Movement toward liberal trade is a steep climb up a slippery slope. If you don’t more forward, you slip back. And if you slip far, you tumble—into an economic cold war where nobody trusts anybody and everybody stagnates. We could have jungle warfare in short order if we can’t maintain the momentum we have so painfully built up since 1934.

This is a matter of international politics as well as economics. We all recognize that this is a time of stress and redirection for the Atlantic Community. We can emerge stronger and more mature. Or we could dissolve into rival islands. Many things will go into determining the outcome. But it is clear that this negotiation was an important test. And it is clear that, during the past few weeks, we and our friends have passed it with flying colors.

So, in thinking about the Geneva results, I urge each of you to try to see it from my chair for a moment. Imagine yourself as trustee for 200 million people, and the most effective Alliance constructed. These are the real issues at stake.

I spent many, many days and hours studying the situation, and consulting with my advisers. Although we don’t have all the final details yet, I am confident that we have a solution here which:

• —makes economic sense;
• —moves us a giant step toward the economic world most profitable to us, the economic world which provides the best basis for the political arrangements which have kept the general peace and promoted prosperity for 20 years.

Francis M. Bator ³

1. Source: Johnson Library, Bator Papers, Chron, Box 5. No classification marking. A May 15 note from Bator to the President, 11:45 p.m., attached to the source text, reads: “The attached Talking Points were designed for a larger breakfast involving the full bipartisan Leadership, Cabinet Officers, etc. However, you might wish to glance at it and use some of the Points anyway.”
2. According to the President’s Daily Diary, this meeting took place in the second floor dining room of the White House on May 16, from about 8:30 to 10:20 a.m. It was attended by the President, Vice President Humphrey, Senators Mansfield, Byrd, and Long, Speaker McCormack, Congressmen Albert, Boggs, and Mills, Postmaster General O’Brien, Harold Saunders, Mike Manatos, Bator, and Califano. Bator briefed those present on the Kennedy Round beginning at 9:15 a.m. A footnote following Mills’ name reads: “Cong. Mills was invited at Francis Bator’s suggestion—The President tried to call him and thank him last night re Kennedy Round legislation and could not reach him. Bator says, ‘Mills played a key role in the birth of the Trade Expansion Act, and he will be a key figure in the chemicals legislation we will need.’” (Ibid., President’s Daily Diary)
3. Printed from a copy that bears this typed signature.