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

303. Action Memorandum From C. Fred Bergsten of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)¹

Washington, July 3, 1969.

SUBJECT

• Possible Desirability of Modifying Administration Tactics on the Export Control Act

Five factors make me think that the Administration should consider modifying its tactics on the Export Control Act—from active opposition to any liberalization of the bill to passive opposition. This would essentially mean avoiding a massive campaign to defeat any amendments to the present law, including planted speeches on the Senate floor and intense lobbying with individual Congressmen, as now planned. To avoid changing the message to the Soviets, we could make it clear—perhaps when the President signed the bill—that in practice we would do no more liberalizing under a liberalized act than under the present Act. We are of course liberalizing administratively now, by moving our list of restrictions toward the list maintained by the other COCOM countries.

1. We may not be able to defeat a liberalization of the Act without major expenditures of Presidential prestige. The Committees in both houses are certain to report out liberalized bills. There are no accurate readings yet on the likely floor votes but the Senate leans toward liberalization while the House leans toward simple extension.

The worst result for the President, vis-a-vis the Soviets, would seem to be a liberalized bill against which he had fought hard but lost. Domestically, much of the recent overall criticism of the President from liberal quarters is keyed explicitly to his position on the Act. Such criticism would greatly intensify if he were to wage a major battle against its liberalization. There would also be costs in terms of his position on other more important legislation such as the surcharge and the ABM.

2. We could then proceed with the NSDM 17 package of trade liberalization toward China,² which will be held up for at least a month if we continue to condition it on passage of the Act. (The likelihood of leaks about our plans for China, which would lead to conservative outcries which may make it difficult to move at all, become more likely as time passes.) Modification of our active opposition to liberalization of the Act would sharply reduce the apparent inconsistency which persuaded the President to postpone announcing the China package until the Act passes.

3. We would be able to prepare a more meaningful package for Romania as requested by your memorandum of June 30.³ The same contradiction which caused postponement of the China package will affect Romania, although to a lesser extent because Romania is smaller, and less hostile to the United States, and because the Act may be passed by the time the President gets to Bucharest.⁴

4. The State Department proposal on settling the gold claims problem with Czechoslovakia, which I sent you earlier this week,⁵ could be broadened. One reason I recommended against inclusion of MFN treatment in the package, as proposed by State, was the blatant inconsistency with our position on the Export Control Act. The Czech element is less important than the others but not irrelevant if we sincerely wish a settlement on this issue.

5. We could proceed to reduce our control list administratively with fewer problems of apparent inconsistency with our position on the Act. Such administrative liberalization is required to implement that part of NSDM 15⁶ which calls for us to move our control list toward the COCOM list. Bryce Harlow has quite rightly raised the question of whether any administrative liberalization is consistent with active opposition to legislative liberalization.⁷ (I have sent you a separate memorandum for an immediate decision needed on this subject.)⁸

Conclusion and Recommendations

It thus seems to me that the President might (a) avoid the risk of possible significant Congressional losses, and (b) greatly increase his flexibility for dealing with a number of important foreign policy problems, by modifying his stance on the Export Control Act.

I fully recognize that he wishes to avoid giving the Soviets anything at this time and that he might interpret the suggested shift as doing so to such a degree that it would override the gains just cited.

It seems to me, however, that he could maintain precisely the same posture toward the Soviets by making it clear that, even if Congress forces upon him a “liberalized” Act, we would in practice do no more liberalizing than we would with a simple extension of the Act. We have argued that we can do any liberalizing we want within the present law, which is true, and this approach would simply make the same argument in the obverse way.

If you think there is any merit to this analysis, I recommend that you raise the issue with the President as soon as possible so that we could: (a) soften the tone of the Administration’s testimony at the Senate hearings on the Act on July 10, (b) call off the planned campaign to aggressively oppose any amendments to the Act, and thus (c) proceed with the China and Romania packages and the administrative liberalization currently proposed by Commerce under the present Act.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 401, Trade General, Volume I. Secret; Sensitive. Drafted by Bergsten and cleared by Sonnenfeldt, Halperin, and L. Grant. A handwritten notation at the top of the page reads: “Orig not returned from HAK’s ofc, action unknown. Houdek’s ofc.”
2. Document 302.
3. Memorandum from Kissinger to Eliot Richardson as Chairman of the NSC Under Secretaries Committee. (National Archives, Nixon Presidential Materials, NSC Files, Historical Files, U/DM 14)
4. See Document 305.
5. Memorandum from Rogers to President Nixon, June 20, 1969. (National Archives, Nixon Presidential Materials, NSC Files, Country Files, Europe-Czechoslovakia, Vol. 1) It is scheduled for publication in Foreign Relations, 1969-1976, Eastern Europe; Eastern Mediterranean, 1969-1972.
6. Document 299.
7. Possibly a reference to a June 10 memorandum from Harlow to Kissinger bringing to his attention an attached June 9 Department of Commerce memorandum from Sol Mosher to Harlow suggesting a softening of the position against liberalizing the Export Control Act. Harlow requested Kissinger’s guidance, and Kissinger wrote a note that reads: “Bryce: The President has seemed very strong on this. I cannot go back to him. But please feel free to raise it as legislative matter.” A handwritten note at the top of Harlow’s June 10 memorandum indicates Kissinger’s comment was sent to Harlow on June 14. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 401, Trade General, Volume I)
8. Not found.