65. Action Memorandum From the President’s Assistant for International Economic Affairs (Peterson) to President Nixon 1

SUBJECT

  • OECD Ministerial Meeting

Secretary Rogers, who will head the U.S. Delegation to the June 7-8 OECD Ministerial Meeting, has submitted a memorandum outlining the proposed U.S. objectives and the issues to be discussed (Tab A).2 The Ministerial Meeting will involve a high-level exchange of views on three agenda items:

1.
Economic policies and prospects in the OECD area;
2.
Perspectives for international trade;
3.
Policies for cooperation with developing countries.

In addition, Australia will be welcomed as the 23rd full Member of the OECD.

Commerce, Agriculture, Labor, OMB, AID, Council of Economic Advisers, Ambassador Gilbert, and the Federal Reserve Board concur in the State proposals.

Secretary Connally (Tab B) is opposed to the idea of an OECD restricted trade group. Treasury believes it would constrain our freedom of action, and that we should not commit ourselves to “an initiative which … may be doomed to impotence or acrimony.” If, nevertheless, you decide to support creation of the group, Treasury believes it “should not branch out into areas beyond trade policy.”3

[Page 158]

Apparently, Secretaries Rogers and Connally reviewed this with you on the plane to Austin, Texas,4 but they have rather different impressions about what was agreed.

Secretary Connally has also suggested “that the Delegation focus attention on the degree to which defense expenditures are to be taken into account in the OECD’s examination of our economic and balance of payments position.”

On May 1, you authorized State to conduct consultations concerning the practicability of establishing an OECD restricted study group.5 Subsequently, the OECD Secretary General advanced the proposal for such a group on his own responsibility. While final positions are unlikely to be taken by governments until the meeting, the extensive consultations carried out by State indicate wide interest and substantial support for the proposal which, under OECD rules, requires unanimity for adoption. The European Community, some members of which have reservations, could still block action, but the French statement that this matter could be worked out by “reasonable men” indicates the likely outcome.6

I do not believe it would be desirable at this late date to oppose formation of the group. To do so might be interpreted both as backing away from an idea we floated and as a stand against positive initiatives at a time when monetary relations are strained. The restricted group would permit us to talk quietly with the European Community, Japan, Canada, and the U.K. about how we will deal with economic problems, including agricultural trade, after Britain enters the Common Market. It is important that we get at this now that British entry seems assured. Finally, I anticipate that the working group would assist in the domestic process of developing a U.S. position for a possible multilateral negotiation, much as the NATO examination of allied defense strategy proceeded in tandem with examination of the same issues in the NSC.

On the other hand, I share John Connally’s view that we should make clear we are not foreclosing our right to take other trade initiatives [Page 159]while the OECD study proceeds, and that the group’s scope should be narrowed. I also believe it would be well to focus some attention on the defense burden at the OECD Ministerial. Therefore I recommend that you approve Option 3. Henry concurs.

I have reason to believe that Option 3 is acceptable to Secretary Rogers. Acting Secretary Irwin states that Secretary Rogers is so strongly opposed to Option 2 that he would like, if necessary, to discuss the matter with you by phone prior to your decision.

Options

  • Option 1: Approve State position, supported by all concerned, except Treasury, as submitted.7
  • Option 2: Agree with Secretary Connally that we should oppose creation of an OECD restricted Trade Study Group.
  • Option 3: Approve State proposal as modified in the attached draft telegram (Tab C).8
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 273, OECD. Confidential. A copy was sent to Kissinger. Attached to a June 5 memorandum from Huntsman to Peterson setting out marginal comments the President had written on Peterson’s memorandum, but the source text bears no marginal comments.
  2. The 12-page “OECD: Objectives Paper,” dated May 25, is not printed. A copy attached to a June 1 memorandum from Johnston to Kissinger is accompanied by a May 29 memorandum from Rogers to the President informing him that he planned to use it as the basis for U.S. participation at the June OECD Ministerial. (Ibid.)
  3. Tab B, a memorandum by Connally, is not printed. In a June 1 information memorandum to Kissinger, Johnston noted that the reasons for Treasury’s opposition to the special trade group were not very clear, but he recommended that Kissinger support establishment in the OECD of a special group to study trade and related items. Haig approved for Kissinger. (Ibid.)
  4. The President traveled to Austin on May 22 for the dedication of the Johnson Presidential Library. Rogers and Connally accompanied him, but did not return with the President later in the day. (Ibid., White House Central Files, President’s Daily Diary)
  5. Not further identified. Telegram 79858 to Paris, May 7, informed the Embassy and the OECD Mission that the President had authorized “consultations concerning the practicality of establishing an OECD restricted study group to examine international economic problems and to recommend methods and programs for dealing with them. The President did not wish the United States to push to establish such a restricted group in the OECD unless there were co-sponsors and good prospects for success.” (Ibid., Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 678, France, Volume VII 4/71-12/71)
  6. Not further identified.
  7. The June 5 memorandum from Huntsman to Peterson (see footnote 1 above) indicates the President wrote “No” after Option 1.
  8. The President initialed his approval of this option. The June 5 memorandum from Huntsman to Peterson indicates the President also wrote: “I agree in principle with Connally all the way. Tactically we are boxed in. But I want the Connally line to influence all our decisions in this matter.” Tab C is not printed, but see Document 66 for the revised text.