Office of the Historian

172. Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), Washington, April 12, 1973.1 2

Washington, April 12, 1973

MEMORANDUM
NATIONAL SECURITY COUNCIL
INFORMATION

April 12, 1973

MEMORANDUM FOR: DR. KISSINGER
FROM: ROBERT HORMATS [RH initialed]
SUBJECT: US-Japan-EC Economic Data

Peter Flanigan has sent you the following data on US-EC and Japanese trade. The most salient points are:

  • — Exports are an important share (14.2%) of US production, but are an even more important share of the production of the EC (24.2%) and Japan (34.4%).
  • — Neither the US nor the EC export a significant share of their production to the other (3.6% versus 3.8%); but Japan exports 10.9% to the US.

From this Flanigan concludes that:

  • — In multilateral trade negotiations trade is important to all three parties, but considerably more important to the EC and Japan than to the US.
  • — In bilateral negotiations between the US and EC trade between them is relatively unimportant and neither side is particularly vulnerable to the other.
  • — In bilateral negotiations with Japan, Japan is clearly vulnerable to the US, as it exports eight times as much of its production to us as we export to it.

This information, however, does not take us very far. We should not conclude from it that our interests are served by bludgeoning the Japanese with a threat to restrict their imports into the US. Moreover, although percentages indicate that our reliance on trade is small in relative terms, our total exports are the largest in the world. They account for just under $50 billion and affect such key American industries as agriculture, computers, aircraft, and agricultural machinery. A substantial cut back in the production of these sectors would have disastrous economic and political effects. To fall into the intellectual argument that trade is less significant for us than others could lead to actions which, while disastrous to other nations, would have severe implications for us as well.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 538, Country Files, Far East, Japan, volume 9, January–June 1973. No classification marking. Sent for information. Kissinger initialed this document. Peter Flanigan sent these trade statistics to Kissinger under a covering memorandum, March 8.↩
  2. Hormats summarized economic data on trade between the United States, the European Community, and Japan.↩