Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

75. National Security Decision Memorandum 130¹

Washington, September 7, 1971.

TO

• The Secretary of State

SUBJECT

• U.S.-Japan Joint Economic Committee Meeting

The President has reviewed your memorandum of September 1, 1971 on this subject, as well as the CIEP paper of August 24, 1971.²

The President has directed that in the ECONCOM meetings, the U.S. Delegation be guided by the following principal points:³

1. Throughout the meetings, as proposed by the Secretary of State, we should endeavor to re-establish in the minds of the Japanese the significance and closeness of the U.S.-Japanese relationship through a series of forthcoming political and psychological measures. We should:

• —Assure the Japanese that shortly after the ECONCOM meeting the President will send the Agreement for Reversion of Okinawa to the Senate with a strong recommendation for its early ratification.
• —Reaffirm our offer to explore with Japan and other countries the possibility of selling them U.S. technology for use in gaseous diffusion plants in third countries for enrichment of uranium.
• —Indicate our desire for closer scientific collaboration in seeking solutions to common problems in the fields of transportation and ecology.
• —Indicate our desire to cooperate to seek liberalization of the trade policies of the European Community.
• —Indicate our desire to work within the OECD High Level Group to prepare the way for a major multilateral attack on trade barriers.
• —Indicate our desire to develop international procedures for adjudicating investment disputes in developing countries.⁴

2. The U.S. new economic policy, with special emphasis on our balance of payments goals, should be clearly explained to the Japanese delegation. We should state strongly that it is our conviction that a reasonably balanced trade account between our two countries is necessary, and feasible by the end of 1973. It should be pointed out that, as we understand Japanese balance of payments and trade projections, they are incompatible with our objectives. It should be proposed that we work together to achieve mutually agreed compatible balance of payments goals.

3. The overriding U.S. objective is to obtain a revaluation of the currencies of our major trading partners, which will include a substantial revaluation of the yen. While negotiations on the exact amount of yen revaluation sought should be carried out multilaterally, Secretary Connally is authorized privately, if he wishes, to inform the Japanese Ministers that a revaluation in the range of 15 to 20 percent is necessary.

4. We should indicate that we would remove the 10 percent surcharge only when our external position is assured.

5. Beyond this, we wish to achieve our balance of payments goals primarily through trade liberalization, and we expect the Japanese to remove quotas and other import restrictions illegal under the GATT. We are particularly interested in prompt removal of quotas on agricultural items, computers, aircraft, and integrated circuits.

6. We should welcome the Japanese eight-point program, commend their efforts so far, and urge them to go further.

7. It should be made clear to the Japanese that we still seek a negotiated voluntary restraint agreement for textiles but will be prepared to solve the problem in other ways if an agreement is not forthcoming. Our continuing need for a voluntary restraint agreement for steel exports should also be made clear.

8. We should stress our desire for even closer economic cooperation in the future. To this end, we should propose periodic meetings with the Japanese,⁵ starting with a special interagency mission to Japan by next January to assess with the Japanese specific progress toward agreed upon balance of payments goals, compatible economic policies and the eight-point program, to identify remaining or emerging trade problems, and work out constructive, timely solutions to common economic problems.

9. In discussing lower priority economic objectives, including increased Japanese defense procurement in the United States, increased aid on such terms, and investment liberalization, our delegates should make clear our wishes in low key, relating such secondary points to our overall balance of payments goals.

Henry A. Kissinger

1. Source: National Archives, RG 59, S/S Files: Lot 83 D 305, NSDM 130. Secret. Copies were sent to the Secretaries of Treasury, Defense, Agriculture, Commerce, Labor, Interior, and Transportation; Ambassador at Large Kennedy; the OMB Director; the Chairmen of the Council of Economic Advisers and the Council on Environmental Quality; the Special Trade Representative; the Assistant to the President for Domestic Affairs; the Director of Central Intelligence; and the Chairman of the Joint Chiefs of Staff. On September 9 Peterson sent a memorandum to Kissinger complaining that this Decision Memorandum should have been signed jointly by the two of them (or should have been a CIEP Decision Memorandum signed by Peterson), because the CIEP members looked to him as their spokesman. (Ibid., Nixon Presidential Materials, NSC Files, Agency Files, Box 218, CIEP) On a September 10 memorandum from Hormats regarding Peterson’s complaint and another procedural issue, Kissinger wrote, “Life is too short for this sort of thing.” (Ibid.)
2. Rogers’ memorandum is Document 74. The August 24 paper is not printed, but see Document 73. On September 3 Hormats sent Kissinger a memorandum regarding the “bureaucratic problem” Rogers’ memorandum (which had “circumvented” Peterson) had created. Noting that Peterson was attempting to reconcile the CIEP paper with Rogers’ memorandum, Hormats indicated that if agreement could be reached, he would recommend a joint memorandum from Kissinger and Peterson to the President summarizing the agreed objectives. (National Archives, Nixon Presidential Materials, NSC Files, Country Files—Far East, Box 536, Japan Volume V 7/71-9/71) Agreement on most issues was reached, and a draft joint Kissinger-Peterson memorandum to the President, September 5, became NSDM 130 after some revisions. (Attachment to memorandum from Hormats to Kissinger, September 4; ibid.) See also footnote 1, Document 74.
3. The meetings were held in Washington September 9-10. See Department of State Bulletin, October 4, 1971, pp. 346-354, for the joint communique and statements by President Nixon, Secretary Rogers, and Foreign Minister Fukuda at the conclusion. The President’s and Foreign Minister’s remarks are also in Public Papers of the Presidents of the United States: Richard M. Nixon, 1971, pp. 945-947. Kissinger sent a September 10 memorandum to the President calling his attention to the “more salient aspects of the communique” and concluded: “On the whole discussions were amicable, but pointed up several unresolved economic issues, the most important being how much the yen will be revalued and how far Japan will move in the future to liberalize imports.” (National Security Council, Box 98, 8/27/71 SRG Meeting—Japan)
4. Two additional points were included in the September 5 draft (see footnote 2 above). The first dealt with satellite television coverage of the Emperor’s visit. The second concerned the election of a Japanese Chairman of the GATT in November, a proposal made in the August 24 CIEP paper.
5. According to Hormats’ September 4 memorandum to Kissinger, the State Department opposed this proposal “on the grounds that it is unnecessary and it would circumvent State’s apparatus.” Hormats noted that Peterson and the economic agencies saw this as their only remaining new initiative for the ECONCOM and recommended it be retained despite the State Department’s objections.