276. Telegram From the Department of State to the Embassy in the United Kingdom1

37244. Pass to Under Secretary Rostow.

Senate today voted 49-29 to incorporate Byrnes Amendment2 into Defense Appropriations Bill. This confirmed House action yesterday and provided that none of these appropriated funds shall be used for construction of any naval vessel in foreign shipyards.
This threatens right of HMG to bid on 16 minesweepers which Navy had previously selected as appropriate for HMG competition under offset agreement. As funds for 9 of these 16 provided under FY 66 and 67 Defense Appropriations Acts, and thereby not affected by Byrnes Amendment, HMG may have some expectation that they eligible to bid and to win orders on these 9, even if ineligible to bid on 7 being funded under FY 68 Act. DOD is currently examining these and other prospects, but not yet prepared to encourage or discourage HMG expectations.
If as we expect HMG raises question of 8 minesweepers, believe HMG should not be encouraged in any optimistic expectations. We can say that DOD is currently searching every means to permit British to bid on as fair and equal terms as possible for 9. Further, we can convey assurance that nothing in Byrnes Amendment will prevent USG fulfilling the $325 million and supplementary offset targets.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 UK. Confidential; Priority. Drafted by Cheslaw; cleared in G, M, and the Department of Defense; and approved by EUR.
  2. For text of this amendment to P.L. 96-90, the Defense Appropriations Act of 1968, approved September 29, 1967, see 81 Stat. 238.