262. Memorandum From Stephen Thompson of the Department of State Industrial and Strategic Materials Division to the Chief of the Department of State Industrial and Strategic Materials Division (Todd)1
SUBJECT
- CEA Opposition to Commodity Agreements
At a May 14 meeting with Under Secretary Rashish, Bill Niskanen, a member-designate of the Council of Economic Advisers (CEA), in the course of his comments against commodity agreements, stated that he had been dismayed to learn that the principal reason for the U.S. joining the tin and rubber agreements was to avoid embarrassing the Department of State. According to Art Kobler, EB/STA, who also attended the meeting, Rashish readily defended our membership in those agreements with strong foreign policy arguments but he added that he would not try to defend them on economic grounds. Then, Kobler said, Rashish stated his basic position on commodity agreements: although the U.S. should continue to honor its existing [Page 663] commitments, it would be best for the U.S. to avoid joining agreements for other commodities. Rashish stressed that our commitment to join the rubber agreement was a government commitment and not the State Department’s and he pointed out, that to withdraw shortly before the Secretary’s ASEAN trip in June2 would be counterproductive.
Mr. Kobler, who was once assigned to ICD, told Niskanen that based on political and not economic considerations, as a least cost demonstration of our commitment to improving North-South relations, the U.S. decided in 1976 to join the Fifth International Tin Agreement and to participate in the natural rubber agreement negotiations. Kobler also stressed the importance of maintaining good relations with ASEAN.
Although Niskanen’s opposition to U.S. membership in commodity agreements was rather obvious, Kobler thought Niskanen would grudgingly accept U.S. membership in the tin and rubber agreements after this testing of Rashish’s views, and perhaps a sudden realization that withdrawal from existing commitments might result in undesirable foreign policy implications.
A free-trader and former Ford employee, who was apparently fired for his opposition to import controls, Niskanen will be responsible for micro-economic matters including trade, at CEA.
FYI. Greg Christopulos of USTR told me on May 14 that someone (probably Niskanen) from CEA called the OMB office director responsible for commodities and told him of his opposition to commodity agreements.