379. Memorandum From Robert Hormats of the Operations Staff, National Security Council to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Position on Proposed Export Expansion Act

On January 24 hearings will begin on the “Export Expansion Act of 1971.” This bill, introduced by Senator Magnuson, proposes a number of measures to strengthen U.S. export performance. In so doing, it calls for additional measures to expand exports and casts doubt on the effectiveness of the Administration’s own comprehensive export expansion efforts (including the August 15 package and subsequent trade and monetary agreements). The attached memorandum to Shultz (Tab A)2 indicates that you consider the appropriate Administration position to be one of opposition to the Magnuson bill. State, OMB, and the CIEP staff also agree to this posture.

Major issue

There is, however, one major bureaucratic issue of which you should be aware. The Magnuson bill proposes to transfer responsibility for international commercial and economic matters from the Department of State to Commerce and create a new international commercial service in Commerce. Stans supports this measure. State (Tab B)3 and OMB oppose.

We have been through this before. Although the proposed transfer would give more emphasis to commercial and economic matters and probably mean that better personnel could be recruited for export promotional activities, it would remove a major part of State’s functions in the international economic field and give them to an agency which historically has taken a harder line on such issues. Because our relations with the Common Market, Canada, and Japan will have an increasingly large and sensitive economic component which will have important political implications, such a transfer at this time would be particularly risky in foreign policy terms. And, while State’s line may frequently be too “soft” on such issues, in the next several months it will be preferable to start out with a “soft line,” which could subsequently be [Page 827]hardened by the other agencies, rather than for Commerce to push economic interests too hard at the outset and thus place you in the position of having to take on Commerce and Treasury in order to bring about a line more consistent with our foreign policy interests.

The memorandum for Shultz at Tab A indicates that you favor an Administration position opposing the Magnuson bill and that, on the specific question of the transfer of commercial and economic matters from State to Commerce, you favor retaining these functions in State.

Recommendation

That you sign the memorandum to George Shultz at Tab A.4

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 402, Trade, Vol. V. No classification marking.
  2. Not printed.
  3. Tab B is printed as Document 378.
  4. Kissinger did not sign the memorandum to Shultz and wrote at the top of Hormats’ memorandum, “I want to stay out of this.”