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

SUBJECT

  • U.S. Trade Policy

Arthur Burns has included, in his report to the President, proposals for new trade legislation.2 He has asked the State and Commerce Departments to comment on them by March 12. The proposals are fine substantively, but raise jurisdictional questions in view of the NSC Trade Study which is due on March 31 (for an NSC meeting on April 16).3

I have talked to Dr. Burns about the conflict but he does not wish to relax his deadline. He also questions the appropriateness of NSC consideration of trade policy, but will make no effort to derail our present study. (I assured him that we by no means view the NSC as the decision-making body in this area, and that its discussions would be only one input to the President’s final decisions.)

The President has, however, specifically asked Dr. Burns for comments on Secretary Stans’ proposal to move the Office of the Special Trade Representative from the White House to the Commerce Department.4 Our NSC study includes the general question of the future management of trade policy, under which the Stans proposal is one option. Dr. Burns has therefore asked to be invited to participate in this phase of our study. (The President also asked Budget Director Mayo for his opinion on the Stans proposal. Mayo replied that the NSC was studying the matter and “strongly recommended” that any decision [Page 479]await our results.) Substantively, Dr. Burns leans towards giving STR to Commerce rather than State, if it is not continued as an independent office within the White House.

Dr. Burns has thus raised fundamental questions about U.S. trade policy decision-making and hence about trade policy itself. The subject matter cuts across foreign policy and domestic grounds so a legitimate question is involved. The U.S. has traditionally viewed trade in a foreign policy framework, and hence State and the NSC staff, within the White House, have taken the lead. The creation of STR in 1962, however, was an effort—which has proved successful—to reconcile the foreign policy and domestic business viewpoints. Any further shift from our present organizational approach, especially toward Commerce Department control, would be interpreted abroad as a clear signal that the U.S. was going protectionist.

It is thus extremely important that the NSC continue to play a role, although by no means an exclusive one, in trade policy formulation. I recommend that you take any available opportunity to make that point to Dr. Burns. At the same time, it would be prudent to include him in at least the trade management aspect of our study and probably the rest of it as well. Despite the awkwardness of having two White House representatives appear at a single meeting, I recommend that you sign the attached invitation to Dr. Burns—unless you feel that the principle involved is sufficiently important to try personally to talk him out of it.

Recommendation:

That you sign the invitation at Tab A.5

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 403, Office of the STR. Limited Official Use.
  2. See Document 185.
  3. See Document 182. The NSC meeting was held on April 9; see Document 192.
  4. Stans’ proposal was not found. In a March 21 memorandum to Robert Ellsworth, the President’s Assistant, Secretary of the Treasury Kennedy expressed his strong opinion that the Office of the Special Representative for Trade Negotiations be maintained as a separate agency within the Executive Office of the President. (Washington National Records Center, Department of the Treasury, Secretary’s Memos/Correspondence: FRC 56 74 A 7, White House Jan-Aug 1969) On March 22 Under Secretary of State Richardson sent a paper to Ellsworth that stated the State Department position of retaining the office in the White House. (National Archives, RG 59, S/S Files: Lot 73 D 288, NSC/Misc) Documentation on Secretary Stans’ proposal to move the Office of the Special Trade Representative to the Department of Commerce is scheduled for publication in Foreign Relations, 1969-1976, Organization and Management of Foreign Policy, 1969-1972.
  5. Attached but not printed is a memorandum from Kissinger to Burns inviting Burns to participate in a study of the future administration of U.S. trade policy, which would be part of the larger paper on U.S. trade policy being prepared by the NSC Ad Hoc Group created by NSSM 16.