Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

238. Memorandum of Conversation¹

Washington, July 9, 1970.

President’s Meeting Thursday, July 9, 1970

ATTENDED BY

• The President
• Congressman Wilbur Mills
• Congressman John Byrnes
• Mr. Harlow
• Mr. Shultz
• Mr. McCracken
• Mr. Timmons
• Mr. Bergsten

The President opened the discussion of pending trade legislation by indicating that he could not accept shoe quotas. They would cause major problems in our relations with Italy and Spain, and trigger retaliation.

Chairman Mills replied that the President would have discretionary authority to apply the quotas, depending on whether there was market disruption. He still did not know whether shoes would be in the bill—but Congressman Byrnes interjected that he was sure they would be. Mills added there would also be an effort to legislate steel quotas, which would take effect if the present voluntary restraint agreements were not extended.

Mills and Byrnes indicated that the emerging bill would give the President great flexibility. They had accepted every amendment proposed by the Administration. Mills would insist on a time limit for the quotas. Mills said he could pass a bill including textile quotas, shoe quotas, and a general authority to restrict imports in other industries in cases of market disruption. He expressed confidence that the bill would help obtain voluntary agreements on textiles, but admitted that shoe agreements would be difficult—here, though, the President could use the waiver authority to exclude a large portion of the imports.

Mills added that he needed help from the Administration in getting rid of ASP and passing DISC, but that he wanted to do so—and in fact wanted to give the President everything he asked for. The President replied that he did want both ASP removal and DISC in the bill. In response, Mills noted that former Assistant Secretary of State Solomon had recommended that Congress send the ASP deal back to the President, and ask for a better package in return.

Mr. Harlow asked whether it would be possible to limit the bill’s restrictions to a general authority to limit imports. Mills thought this was not a live option. The President indicated, however, that he would prefer such an approach, which would give him the desired bargaining position with the Japanese, and that the legislative history could indicate that the general authority was to be used within a certain period to deal with textile and shoe imports. He agreed with the Congressmen that Tariff Commission action often took too long to be of help.

Mills indicated that there was a problem, since textiles could only show injury in limited areas. (In an aside, he remarked to the President that they had both been fooled by the textile industry, which had no case for overall protection.) Nevertheless, he could get seven or eight Democrats to support the general authority as a substitute for specific quotas. Byrnes indicated, however, that the Republicans would insist on adding the authority to specific quotas for shoes and textiles. Mills added that the law should include a rather restrictive base period for the quotas to help our negotiating position for voluntary agreements.

Turning to the specifics of the proposed general authority, Mr. Shultz suggested that restrictions be generally authorized when the growth of imports exceeded some fixed rate, in lieu of any quotas on specific times. In response, Mills indicated his opposition to mathematical formulae and argued that the President should have the widest possible discretion. The Chairman expressed his confidence in the President, in contrast to his feeling that President Johnson would never have used such authority even in legitimate cases.

Mills concluded that his Committee would make its decisions in the following week and get the bill out shortly thereafter. He assured the President that he would send up a bill which the President could sign.

The President reiterated that he would prefer a general authority to quotas on shoes, textiles or any other specific industries. He noted that the authority must be credible to the domestic industry and the foreigners, but provide him with sufficient flexibility. The President pledged that, if given a general authority to implement quotas by the Committee, the Administration would negotiate extremely hard to get textile restraints and therefore fulfill the commitments made to that industry. At Mills’ request, the President also suggested that Dr. McCracken take part in the hearings on the following day.

For the longer term, Mills concluded that we must assess whether traditional U.S. trade policy will work in the future, or indeed has been working since the mid-1960s. The President suggested that the new Productivity Commission might look at the issue. Mr. Bergsten added that the Williams Commission on International Trade and Investment Policy was already doing so.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 401, Trade General Volume II 4/70-12/70. Confidential. Drafted by Bergsten on July 11. The meeting was held in the Oval Office from 4:40 to 6:02 p.m. (Ibid., White House Central Files, President’s Daily Diary)