373. Memorandum From the Director of the Office of Management and Budget (Shultz) to President Nixon 1

SUBJECT

  • Committee on International Economic Policy

I. The Problem.

There is wide agreement (your own advisors, the Ash Council) that international economic policy is and will be of great importance and that we need an identified working group at the highest level to coordinate its development and execution.

The problem is to locate and staff this effort appropriately, bearing in mind the following objectives:

A.
Provide a clear top-level focus for the full range of international economic policy issues to assure these problems receive consistent, timely attention.
B.
Deal with international economic policies—trade, investment, balance of payments, aid, defense, and financial—as a coherent whole.
C.
Achieve consistency between domestic and foreign economic policy.
D.
Maintain close coordination with basic foreign policy objectives.

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II. Alternatives.

There is general agreement on the principal Cabinet Departments involved: State, Treasury, and Commerce, with Agriculture and Labor also involved in certain respects.

The central questions are: where should responsibility for chairmanship and the direction of this effort be lodged; and how should the staff work of the Committee be directed and executed.

The Ash Council argued persuasively to you against locating central responsibility in one of the Cabinet Departments. They argued in favor of placing responsibility in the Executive Office, using a reconstituted STR to take advantage of the staff positions available there. It would direct work of a Council, almost comparable with the NSC or Domestic Council, chaired by the President. Such a high profile operation would also involve major staff responsibilities in the Executive Office.

An alternative approach follows certain principles you developed in subsequent discussion. These are:

  • —The Committee will be chaired by the President.
  • —Its designated membership will be small, with the extras involved in individual meetings severely restricted, on the NSC model.
  • —The effort will have a low profile.
  • —The tendency to build up an extensive staff in the Executive Office is to be resisted, with staff effort to be provided by the Departments and other existing staff units, sometimes on special assignment to the Committee.

III. Proposed Organization and Working Arrangements.

A.

The Committee will be chaired by the President, and consist of the Secretary of State, of the Treasury, and of Commerce, the Chairman of the Council of Economic Advisers, the Assistant to the President for National Security Affairs, the Executive Director of the Domestic Council, and the Director of the Office of Management and Budget. Additional attendance at meetings will be by invitation for specific agenda items.

You may wish to add the following, though it would enlarge the size of the group:

Secretary of Agriculture

Secretary of Labor

The Special Trade Representative2

B.
A working group will be established at the political appointee level, to help the Committee in its operations. It will act as the general secretariat for work of the Committee and be responsible for the staff work. Its responsibilities will include:
  • —Establish a work program, including topics, timing, and identification of individual assignments.
  • —Develop the agenda and supporting materials for the Committee.
  • —Review all papers going to the Committee.
  • —Establish Task Forces on special topics.
  • —Follow up on decisions reached, coordinating actions of the Government where that is necessary.
  • —Help develop a sense of direction, strategy and the relationship of the parts to the whole of this problem area.

The Chairman of the working group should have ready access to the President and should be able to initiate projects and call upon staff resources from throughout the Government to augment his own small staff.

State argues that it should chair this working group, largely on the grounds of primacy of interest, staff ability, and the importance of such recognition to its foreign policy role.

So far as I have found, State is alone in this view and all others argue that the chair should be in your Executive Office. The same arguments against any Cabinet Department chairing the main Committee are operative: need for the Presidential point of view, safeguard against over-emphasis on a particular department’s concerns, reluctance of departments to take direction from one another and the primacy of other departments in certain areas, such as Treasury in the monetary field.

I recommend that the working group be chaired in the Executive Office.

C. Working subcommittee will be established initially as follows:

1.

Committee on Trade Policy and Developments including State, Treasury, Commerce, Agriculture, Labor, CEA, STR, OMB and NSC. This group would deal with critical trade matters, where the need for better coordination is particularly critical. The chair should be taken by

CEA

STR 3

2.
Committee on Monetary Policy, including balance of payments problems, chaired by Treasury with State, the Federal Reserve, CEA, OMB, NSC as members, with others on an ad hoc basis.
3.
Committee on Export Promotion, chaired by Commerce, with STR, Agriculture, Labor, and CEA as members. This effort needs persistent high-level attention.
4.
Committee on Economic Assistance. Use can be made of the National Advisory Council insofar as multilateral aid is concerned, but a decision on the composition and chairmanship of this Committee will need to be integrated with your recommendations on the Peterson Report. The NSC must clearly have an important role in this Committee, and perhaps State should chair it.

George P. Shultz
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 218, Council on International Economic Policy (CIEP), Oct 70–31 July 71. No classification marking. Forwarded to the President by Shultz under an October 13 covering memorandum in which he stated he had discussed the proposal extensively with Kissinger, Ehrlichman, and Flanigan and believed they were “in general accord with it” but noted that they might have some additional comments. Shultz also wrote that he had also discussed it with Rogers, Kennedy, and Stans, who were “in accord except that Secretary Rogers feels very strongly that State should chair the proposed working group.” (Ibid.)

    In addition to his telephone conversation with Kissinger on September 10 ( Document 372), Shultz met with Kissinger on September 11 from 6:54 to 7:25 p.m., with Kissinger, Ehrlichman, and others on September 14 from 6:52 to 7:42 p.m., with Kissinger on October 7 from 6:05 to 6:08 p.m. and 9:31 to 9:42 p.m., and with Kissinger and Ehrlichman on October 9 from 4:36 to 5:39 p.m., at which they could have discussed Shultz’s proposed initiative and memorandum. (Library of Congress, Manuscript Division, Kissinger Papers, Box 438, Miscellany, 1968 to 1976, Record of Schedule)

    Trezise and Samuels wanted Rogers to propose to the President that he use the Under Secretaries Committee as a working group for the CIEP or, failing that, that State either chair the working group or provide the Executive Director. (Memorandum from Samuels to Rogers, October 13, and attached draft memorandum from Rogers to Nixon; National Archives, RG 59, Central Files 1970–73, E 1)

  2. None of the options is checked.
  3. Neither option is checked.