122. Memorandum From Robert Pastor of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)1
SUBJECT
- US Trade Policies with State-Controlled Economies—A Long-Term Idea (U)
During a luncheon I had with Bob Herzstein, Under Secretary of Commerce, on US trade policies as they relate to Central America and the Caribbean, we also discussed the comparative disadvantage which the US has in trading with state-controlled economies, like those in the Communist bloc. Communist countries are well positioned to manipulate one US corporation against another, and maximize not only their economic advantage, but also our dependence on them, since they are in a better position to control the flow than we. (C)
I have long wondered whether it is not possible for the US to consider setting up a USG-exporting company just for coordinating trade with Communist bloc countries. Such a coordinator could manage the flow in a way which maximizes our economic advantage and their dependence. Instead of permitting the Communist countries to let our companies bid against each other, we could define the areas of trade and investment, and determine which company would participate, perhaps by a lottery. The Communists could then take it or leave it. (C)
In the case of Cuba, we have tended to view the trade embargo as either a single unit, or as discrete elements (e.g., on food, medicine, etc.); we have never really focused on ways we could manipulate trade to our advantage rather than Cuba’s. I told Herzstein that I did not anticipate that we would be considering any alteration in the embargo anytime in the near future, but I did expect that the embargo would not last forever. I wondered whether Commerce would consider contracting with some consultant for a long-term study on how we could control trade with a state-controlled economy so that we kept that country on a short leash, rather than ourselves. He expressed interest in the idea, agreeing there was a gap in our policy. I have followed up with his staff to sketch out some ideas, always making it clear that this is not a White House effort or even idea, and we are not thinking about changing the embargo in any way. (C)
[Page 264]I am sending copies of this to Henry Owen and Bill Odom because of their experience with trade and COCOM. I would appreciate comments or ideas.2 (U)
- Source: Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country, Box 16, Cuba, 8–9/80. Confidential. Sent for information. Copies were sent to Owen and Odom.↩
- In the margin, Odom wrote, “Bob—You are on a key issue. If E–W trade is to continue, we must develop an alliance trade coordination policy precisely to deny the ‛planned’ economy’s advantage and to control political aspects. This should be on the Economic Summit agenda for next summer.”↩