Foreign Relations of the United States, 1969–1976, Volume XXIX, Eastern Europe; Eastern Mediterranean, 1969–1972

181. Memorandum From the Chairman of the National Security Council Under Secretaries Committee (Richardson) to President Nixon¹

Washington, July 15, 1969.

SUBJECT

• Improving Relations with Romania

I. Introduction

At the request of the White House,² the Under Secretaries Committee has examined the following eight propositions in the economic field for improving US-Romanian relations: accession to GATT; accession to IMF/IBRD; trade missions; port security regulations; Export-Import Bank loans and guarantees; agricultural credit sales; export controls; and trade agreements and MFN.

Each of these propositions is discussed in detail in the enclosed paper.³

In addition we have looked at the civil air agreement (now in negotiation) and the possibility of certifying Romanian canned hams for import into the United States, to determine their possible utility in connection with your trip.

Consideration of all of these propositions has been in the context of the record since 1960, during which period we have concluded: (a) a comprehensive claims and financial settlement (1960);⁴ (b) broad-gauged arrangements for cultural, educational and scientific exchanges (1960–68); (c) an agreement to take specified steps to improve trade and economic relations (1964);⁵ (d) a joint undertaking to expand scientific cooperation (1968); and (e) arrangements for cooperation in peaceful uses of atomic energy (1968). Now in various stages of negotiation are a consular convention, the aforementioned civil air accord, the establishment of United States and Romanian cultural centers, and publication of an Amerika-type magazine.

Our examination indicates that the prospects for effective action on our part and impact on the Romanians vary markedly from item to item. Nevertheless, to obtain an overview of their potentiality and the possibility of developing a combined package of several items, we discuss them below in order of their importance.

II. Possible Items for Use with Romanians

MFN. The one action on our part that would demonstrate most clearly to the Romanian leadership that we mean to improve relations would be the granting of MFN status. Communist Romania has demonstrated by its increasingly independent foreign policy actions of the past five years that it merits special treatment in United States policy towards Eastern Europe. Despite Romanian assistance to North VietNam, there is widespread admiration in the United States for its assertively independent posture and defiance of the USSR. Alone among the Soviet allies in Eastern Europe, Romania (a) has taken a neutral stand in the Arab-Israeli dispute, (b) recognized and exchanged ambassadors with the Federal Republic of Germany, (c) did not participate in and opposed the invasion of Czechoslovakia, (d) attacked the Brezhnev Doctrine, and (e) has taken a neutral stand in the Sino-Soviet confrontation.

Your decision to seek authority to grant MFN to Romania would represent a modification of NSDM 15⁶ and would raise problems in Congress, where Chairman Mills has been unwilling to support full MFN for Eastern European countries. Although there is probably considerable sympathy for Romania on Capitol Hill, there is recognition that the Romanian communist state is run by a tightly centralized repressive regime. Widespread support for liberalized trade with Eastern Europe nevertheless exists, and your support for MFN for Romania would have an important effect on Congressional attitudes. Such a decision would raise the question whether to seek (a) broad authority to grant MFN treatment to Eastern Europe and the USSR while exercising it at this time only for Romania, and (b) authority to grant MFN to Romania alone.

In return for MFN, the Romanian Government should agree to (a) satisfactory arrangements for settlement of commercial disputes, (b) agreement for the establishment of sales and service organizations in Romania by US firms, and (c) agreement on consultative procedures for problems that arise in the course of trade. Another important United States concern, although not of an economic nature, is to help dual nationals and others in Romania eligible for emigration to the United States to leave Romania. Despite Romanian pledges, progress has been slow. Only some 100 of approximately 2,500 individual cases have been favorably resolved. You might wish to couple an offer of MFN with the recommendation that Romania act to release these individuals, indicating that such action would increase Congressional receptivity. A clear undertaking to fulfill obligations to United States bondholders would also be a welcome Romanian commitment.

Export Controls. We can liberalize our export control treatment of Romania. Romania is now in Category W, which is more lenient than that for most Comecon countries (category Y) but more stringent than for NATO allies and Yugoslavia (category V).

It would be possible by Presidential directive to shift Romania to category V, provided Romania gave appropriate guarantees concerning re-export, trans-shipment, and disclosure of technical data. Alternatively, it would be possible, while retaining Romania in category W, for you to direct the Department of Commerce to expedite special licenses for the export of some or all of approximately 250 items that are available under general license to Yugoslavia and other V countries. The appropriate guarantees could be secured in each case. Such action would not require modification of NSDM 15.

Romania is aware that it is in category W and would probably prefer to be shifted to category V.

Canned Hams. Romania would like to export canned hams to the United States and has some prospect of building up a profitable market here. However, USDA has been unable on the basis of past inspections to certify that the Romanian plants meet the requirements of the Wholesome Meat Act. There have been recent informal reports that the Romanians have made substantial progress in meeting our standards. It would be possible to express gratification at these reports and state that a USDA Meat Inspection Team would be ready to visit Romania again as soon as the Romanians indicate that they feel they have met the requirements and are ready to receive them.

Civil Air Agreement. Negotiations for a Civil Air Agreement were recessed in December, 1968. Still at issue were provisions relating to PanAmʼs right to conduct business in Romania such as sale of tickets and repatriation of earnings. The Romanians requested the recess to consider how their rules could be changed to permit a mutually satisfactory agreement. If the Romanians refer to the Civil Air negotiations, they might be told that we would welcome an agreement as a symbol of further normalization of our relations and are ready to resume discussion when they feel they are ready with proposals that would meet our minimum requirements.

Trade Missions. We could encourage whenever possible private US trade missions to Romania and, if the Romanians are interested, send another US Government trade promotion mission. We can continue to welcome and to facilitate contacts by any trade missions which Romania would like to send to the United States.

Port-Security Regulations. The White House now has for action an Executive Branch proposal to make considerably more flexible the restrictions on entry of merchant vessels of communist countries, including Romania, into United States ports.⁷ This is only of marginal interest to Romania.

Accession to GATT. Romania has applied to become a full contracting party to the GATT. The United States is supporting Romaniaʼs application and, at Romaniaʼs request to us, is a member of the Working Party considering it. Our role in the Working Party, however, is limited because we are unable to assume GATT obligations to extend MFN to Romania. We can do little to strengthen our general support for Romaniaʼs accession unless we get authority to offer MFN treatment during the course of the next few months while the application is under consideration and unless Romania becomes more forthcoming than it has been on the obligations it is prepared to assume for accession.

Accession to IMF/IBRD. Romania has taken occasional soundings, none of them recent, with regard to IMF membership, a prerequisite of IBRD membership. We do not know how serious Romanian interest is or whether she is willing to meet the obligations of membership, even the elementary requirement to disclose her gold and foreign exchange holdings. We can express our willingness to support Romaniaʼs application whenever the management and staff of the IMF are satisfied in their informal contacts that Romania would be able and willing to undertake the obligations of membership.

Agricultural Credit Sales. Romania has long been eligible for Commodity Credit Corporation (CCC) credits for the purchase of agricultural products. However, as an agricultural exporting country, it has shown little interest in such purchases or credits even for non-food agricultural products.

ExIm Bank Loans and Guarantees. Under existing legislation Romania, as a direct supplier of North Viet-Nam, is not eligible for EXIM loans or guarantees so long as North Viet-Nam is engaged in armed conflict with armed forces of the United States. The Romanians are well aware of this prohibition. Although they put great weight on obtaining US credits, they would not consider stopping their supply of North Viet-Nam as the price for regaining eligibility for such credits.

III. Alternate Ways of Handling Items with Romanians

Depending on your judgment and the atmosphere and course of the talks, there are three alternative ways to handle the issues:

1. Discuss the issues with Romanians but make no commitments for further action.

2. Announce action commitments while in Bucharest on several items, such as MFN, civil air agreement, trade missions, and canned ham.

3. Hear Romanians out on these issues and, without commitment, indicate we wish to continue exploration of them with Ambassador Bogdan in Washington.

ELR

1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–270, U/DM 1–19, U/DM 14. Secret.
2. On June 30 Kissinger sent a memorandum to Richardson requesting the Under Secretaries Committee “to recommend a series of propositions that might be put to the Romanians on such items as export controls; accession to GATT; accession to IMF/IBRD; trade missions; port security regulations; Export-Import Bank loans and guarantees; agricultural credit sales; trade agreements and MFN…. It will be desirable to consider this subject before the Presidentʼs Briefing Book for his trip [to Romania] is completed.” (Ibid.)
3. Not printed. The report is entitled “An Examination of Possible Ways to Meet Romanian Desires for Improved Economic Relations.”
4. Dated March 30, 1969; 11 UST 317.
5. Reference is to a Presidential Determination of June 15, 1964, that made Export-Import Bank credit guarantees available to Romania for purchases other than agricultural products. See Department of State Bulletin, July 6, 1964, pp. 26–27.
6. See Document 3.
7. See Document 8.