Foreign Relations of the United States, 1969–1976, Volume E–12, Documents on East and Southeast Asia, 1973–1976

63. Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Scowcroft), Washington, October 14, 1976.¹ ²

Washington, October 14, 1976

MEMORANDUM
NATIONAL SECURITY COUNCIL
ACTION

October 14, 1976

MEMORANDUM FOR: BRENT SCOWCROFT
FROM: ROBERT HORMATS [RH initialed]
SUBJECT: Meat Imports

In connection with the announcement of import quotas on beef, Agriculture intends to issue in the next day or so a regulation concerning meat shipments through Foreign Trade Zones. As presently drafted by Agriculture, the regulation would take effect immediately and thus would apply to Australian beef shipments now being processed at Mayaguez, Puerto Rico.

State has sent a letter to Agriculture pointing out that the proposed regulation is inconsistent with the terms of our various meat restraint agreements and would have a damaging effect on our relations with Australia and other supplying countries. Jules Katz has also discussed this matter with Dick Bell, but Agriculture has thus far refused to budge. Bell contends that the Administration must make a further gesture to the domestic cattle industry and thus is pushing this regulation, which will in effect force Australia to absorb approximately 11 million pounds of beef now in Mayaguez into its overall import quota.

The Australian Government has, however, made it clear that any action taken by us to reduce its quota below the negotiated restraint level would be viewed as discriminatory and would likely provoke a strong reaction in Australia. Prime Minister Fraser wrote the President on October 11 concerning this matter (Tab B). He alluded to possible consequences for our bilateral relations if we move to cut the Australian quota. He said that “. . . the Australian Government could not accept, and the Australian people will not be able to understand, any decision which penalizes, or appears to penalize, Australia for failure on the part of others.” Fraser stressed that our meat import problem stems from above-estimate shipments by Canada, which is not a party to the US voluntary restraint program.

I share State’s concern about this matter, particularly with respect to the possible impact on our relations with Australia. The regulation should apply prospectively not retroactively. We should not penalize Australia at this late date for taking advantage of a loophole in our legislation especially when we told the Australians officially that we had no intention of doing so. The Australians are on solid legal grounds and will hold us accountable in the GATT and elsewhere if we force them to count the recent shipment to Mayaguez under their 1976 quota.

There are some precedents for dealing with situations such as these. For example, when we recently raised the duty on sugar, we exempted shipments in transit from the higher tariff. Also, the Senate this year passed the Curtis Amendment concerning Foreign Trade Zones. The amendment would have required that only those meat shipments which entered a Foreign Trade Zone after the effective date of the act be counted as part of an individual country’s quota. Although the amendment died in the House, it does give us some idea of what might be acceptable to the Congress. Domestic cattlemen supported the amendment.

I recommend that you call Acting secretary of Agriculture Knebel and explain to him the broader policy implications of the proposed regulation and request that his Department give consideration to its modification so that it applies only to future shipments through Foreign Trade Zones. At Tab A are suggested talking points for your call to Knebel.

RECOMMENDATION
That you phone Knebel and discuss with him the proposed meat import regulation.

Concur: W.R. Gleysteen

1. Source: Ford Library, National Security Adviser, Presidential Correspondence with Foreign Leaders, Box 1. Confidential. Sent for action. Concurred in by Gleysteen. Attached but not published at Tab A is Scowcroft’s undated talking points; attached but not published at Tab B is Fraser’s undated letter to Ford. Fraser’s letter concluded, “it is my firm view that the quantity of Australian meat to be permitted entry to the USA this year, should be in no way reduced below the level of 632.2 million pounds previously agreed between our two governments.” On November 6, Deputy Executive Secretary Frank Ortiz notified Scowcroft that Australia had been informed that its quota for 1976 was 632.2 million pounds. (ibid.)
2. Hormats recommended that Scowcroft intervene in a controversy over proposed meat import regulations.