162. Memorandum From Acting Secretary of State Ball to President Johnson1
SUBJECT
- Recommendation for New East-West Trade Legislation
We have made some progress over the past year in our efforts to build bridges to Eastern Europe. I think we might now consider seriously how we could improve our relations with the Eastern European countries in commercial and economic matters.
We are about to begin low-key negotiations with Hungary on financial claims and on some trade matters. The talks will take place in Budapest.
The Rumanian authorities are completing their preparations for placing some rather sizeable industrial orders with U.S. firms. We are moving forward on the necessary credit and licensing arrangements.
When the Secretary talked with Gromyko the other day, he suggested that we might begin informal technical talks in Washington on trade possibilities with the USSR.2 In order for these talks to make any [Page 475] serious progress, it would be necessary for the Soviet Union to settle its lend-lease accounts. I would not rule out the possibility that the New Soviet leadership might be prepared to negotiate an acceptable deal, if, on our part, we could offer most-favored-nation treatment for their products.
As matters stand today your lack of authority to grant most-favored-nation treatment to individual Communist countries—even where you find it to be in the national interest—is a major obstacle to the improvement of our trade relations with the USSR and Eastern Europe.
This point was stressed by your Task Force on Foreign Economic Policy, which recommended that you request such authority from the Congress as the central feature of a new East-West Trade Act.3 It is a matter of judgment whether Congress is ready for action of this kind. Bill Fulbright told me last week that, on the basis of the hearings on East-West trade held by the Senate Foreign Relations Committee in the spring,4 he would be willing to sponsor an East-West Trade Bill if we wanted him to. He felt that there would be generally favorable opinion in his Committee and in the Senate.
This is a matter that obviously needs a careful testing of the water before any final decision is made. But Dean and I thought it well to raise the question with you now and to ask your advice whether we should take some informal soundings on the Hill.
- Source: Johnson Library, National Security File, Subject File, Trade, East-West, Vol. I [1 of 2], Box 49. Secret. Originally drafted in E and S/P and sent to Secretary Rusk along with an explanatory memorandum from Walt W. Rostow (S/P) and G. Griffith Johnson (E), drafted on December 10. Because a typed notation on another copy, attached to this explanatory memorandum, indicates that the memorandum printed here was retyped in U, Ball or his staff may have redrafted parts of it. No earlier draft has been found.↩
- Reference presumably is to their talk on U.S.-Soviet trade on December 9. A memorandum of their conversation on this occasion is scheduled for publication in Foreign Relations, 1964–1968, volume XIV.↩
- See Document 161 and footnote 1 thereto.↩
- See Document 152.↩