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

308. Memorandum From Secretary of State Rogers to President Nixon¹

Washington, December 2, 1969.

SUBJECT

• Next Moves in China Policy

I believe the time has come to proceed with the remaining measures relaxing economic controls against Communist China, which you approved in principle in June (NSDM 17),² as well as to consider other steps we might take toward China.

• —Talks between the Soviet Union and Communist China began in Peking on October 20. We do not believe that these will result in a fundamental change in the Sino-Soviet relationship. The roots of the ideological dispute will remain, together with a certain level of tension. Although the Sino-Soviet discussions have apparently not gone well thus far, we cannot exclude the possibility of at least a partial rapprochement between the Soviets and the Chinese, which might take the form of some restoration of normalcy in state-to-state relations.
• —Our moves may introduce an additional complicating factor into the Soviet leadership’s assessment of our intentions towards China—and towards the USSR, as well. Such an effect would also serve our long-term interest of forestalling an eventual more fundamental rapprochement between the USSR and China.
• —At the same time, this conjunction of Soviet agreement to negotiations both with China and with us on SALT, enables us to maintain our posture of noninvolvement in the Sino-Soviet dispute. Moves by us at this time in the direction of opening the door towards China a little more can hardly be the object of plausible objections by the Soviet Government when it itself is talking with the Chinese.
• —Notwithstanding the ups and downs in Chinese propaganda stridency in recent months, there have been signs of moderation in Peking’s foreign policy stance including—in private encounters—toward the U.S. We cannot predict that such steps as I propose would evoke a favorable response from Peking, but the chance that they might now appears to be greater than it has been for some time. Additionally, when the Chinese leadership appears to be in some disarray, we may contribute to a strengthening of those who advocate moderation and thereby continue to move towards a position where we may be able eventually to exert some influence on the Chinese Government in a direction more favorable to our own interests.
• —Finally, the steps I propose would serve specific U.S. interests. They would also be useful preliminaries to an attempt by us in the near future to revive bilateral discussions with the Chinese and as further signals that we are interested in continuing to move towards more normal relations.

The Republic of China will object to such moves, but I do not believe this should deter us. These actions would not affect any vital security interest of Taiwan or diminish in any way our existing treaty commitments. They would be consistent with what I have told ROC leaders about our general approach towards Communist China.

If you agree that we should move forward, I would contemplate undertaking the requisite Congressional consultation, preparatory to announcement of changes in regulations.

Treasury concurs that all the actions described below can be taken by executive action and approves of the recommendations.

Specific Recommendations

I have considered the whole range of measures we might take—economic, travel, raising the level of the Warsaw talks, etc.—but at this time recommend the following moves to be implemented in two stages.³

a. For implementation immediately:

1. Remove Foreign Asset Control (FAC) restraints on foreign subsidiaries of United States firms on transactions with China regarded as non-strategic by COCOM (approved by you in principle in NSDM 17, June 26, 1969);

2. Eliminate the present restrictions on U.S. business participation in third-country trade in presumptive Chinese goods;

3. Modify slightly your approval in June allowing the noncommercial purchase of Chinese Communist goods by Americans traveling or resident abroad by removing the $100 ceiling and the requirements that noncommercial imports from China enter the United States as accompanied baggage.

In addition to their political effects on the Chinese and Russians, implementation of these measures would:

• —remove a substantial licensing burden on Foreign Asset Control and the general public;
• —relieve a number of difficult problems which our Allies have raised pertaining to United States extraterritorial controls on the activities of American subsidiaries abroad;
• —not make any commodities available which the Chinese cannot already purchase abroad;
• —contribute to the competitive strength of American business concerns overseas and respond to strong pressures from foreign branches of U.S. business concerns in several Asian countries to be allowed to compete for third-country business in goods administratively assumed to be of Chinese origin; and
• —satisfy the desire of tourists, collectors, museums, and universities to import Chinese products for their own account and rid us of administrative headaches.

b. For implementation following the resumption of our bilateral Ambassadorial talks with the Chinese:

1. Modify the Department of Commerce export control regulations through a general license for the export of food, agricultural equipment, fertilizers and pharmaceuticals (approved by you in principle in NSDM 17, June 26, 1969). This would

• —provide an initial opening in the area of non-strategic direct U.S. trade with Peking;
• —would not enable Peking to obtain commodities they are not already able to purchase elsewhere;
• —would represent only a modest extension beyond the offers to sell grain and pharmaceuticals on an ad hoc basis to the Chinese made during the Kennedy and Johnson administrations; and
• —would open up a potential outlet for American farm products (for example, the Chinese Communists have recently expressed interest in purchasing U.S.-produced oilseeds from a large West Coast vegetable oil company through a Hong Kong intermediary).

WPR

1. Source: National Archives, RG 59, S/S Files: Lot 83 D 305, NSDM 17. Secret; Sensitive; Nodis.
2. Document 302.
3. None of the Approve/Disapprove options is checked, but the President approved the recommendations; see footnote 4, Document 309. On December 16 Kissinger sent Richardson a memorandum informing him of the President’s approval of the recommendations for immediate implementation. Kissinger noted that “Implementation of the three specific steps should be initiated in a low-key manner so as to minimize public speculation on the implications of these moves.” (National Archives, RG 59, S/S Files: Lot 83 D 305, NSDM 17)