364. Memorandum From C. Fred Bergsten of the Operations Staff, National Security Council to the President’s Assistant for National Security Affairs (Kissinger)1


  • Secretary Stans’ Proposal to Transfer Responsibility for Foreign Economic
    Functions from the Department of State to the Department of Commerce

The memorandum at Tab I2 summarizes and analyzes Secretary Stans’ proposal to transfer all U.S. foreign economic and commercial functions, both overseas and in Washington, from State to Commerce, and Secretary Rogers’ comments on them.3 Stans wrote that he wishes to discuss the matter with you in detail, and his memorandum to the President is labeled “draft.” The President had told him that the proposals should come through you.

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The Stans request to gain complete control of these functions—and thus to deny the Secretary of State an economic, trade and investment policy role—is ludicrous. It would be like transferring the textile, export control, Hickenlooper, tariff preferences, and other trade policy problems completely to the domestic side of the White House and denying you a voice in them. (Stans proposes two “options,” but the second—to have Commerce take over all foreign economic policy functions, including those relating to Agriculture, Treasury, etc.—is so extreme that even he does not propose it, and I see no need to bother the President with it.)

In fact, the President has often mentioned a desire to use trade policy more actively to support U.S. foreign policy objectives, which hardly argues for giving all responsibility to Commerce. However, the President has also mentioned on numerous occasions his desire to improve commercial functions in our embassies overseas. It is regarding these overseas arrangements (not the Washington backup) that Stans’ arguments are the strongest and Rogers’ the weakest.

However, any change even in this limited area deserves careful study by an impartial agency, competent to handle management and administrative questions as they relate to policy and implementation—the Budget Bureau, which in fact called me when they learned that the issue had arisen again, and indicated that they were prepared to make such a study.

The real question is whether even this proposition deserves study again, since it has been looked at so many times before. I think it does:

  • —The President is obviously concerned about the problem.
  • —No one could argue that State is doing a particularly masterful job in representing our commercial interests overseas.
  • —Agriculture and Treasury have their own foreign representation, and this causes no real problem for State or our Ambassadors overseas.

My own guess is that a Commerce-run commercial service would have people of generally lower quality but with greater motivation to pursue commercial problems, which might on balance be a beneficial tradeoff.

After his request for extended discussion on the proposals, Secretary Stans may consider it a brushoff to have a portion of his proposal rejected and the rest remanded to further study. However, I do not think that much progress can be made in substance by a discussion between you and Stans at this stage. You could hardly leave out State completely, and in fact Stans sent Rogers a copy of his “draft.” A joint HAK/Commerce/State discussion would put you in a role of refereeing administrative questions, which—to say the least—would be unrewarding.

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That you sign the memorandum for the President at Tab I, proposing that Budget, with the assistance of State and Commerce, study the overseas roles of Commerce and State in handling our international commercial affairs.


Disapprove, prefer to set up a meeting to discuss with Stans

Disapprove, prefer memorandum to the President rejecting proposals in entirety

If the President approves the recommendations at Tab I, that you sign the memorandum at Tab II to convey the decisions to the agencies.
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 339, HAK/Richardson Meetings, April–May 1970. No classification marking. Sent for action.
  2. Tab I is attached but not printed.
  3. Documents 362 and 363.
  4. Kissinger initialed this option but wrote on page 1: “Pres. would prefer an ad hoc group I’m sure—maybe including businessmen. Won’t want BOB. Let’s redo. Get Lynn’s view re mechanics. Also I want to discuss with Richardson.”