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

SUBJECT

  • The STR Decision—A Pyrrhic Victory?

I am still seriously concerned about the future administration of U.S. trade policy. The President’s decision to retain the appearance of an independent STR 2 already appears to be undercut in substance by the way in which the decision was implemented and subsequent developments:

1.
The Secretary of Commerce, not the President, offered the position to Carl Gilbert.
2.
The President gave the Secretary of Commerce the option to locate STR physically within Commerce.
3.
Gilbert accepted the position without any conditions concerning direct access to the President or his relationship with other agencies. His well-known eagerness for the position suggested in advance that this would be his response.
4.
On the present trade mission to Europe, Gilbert has been excluded from private meetings between Stans and key foreigners such as Kiesinger and Strauss.

The result, particularly if STR is physically located within Commerce, will be a clear undermining of STR’s leadership role in U.S. trade policy. Such a result would adversely affect the President in the following ways:

1.
The widespread kudos he has received for retaining an independ-ent STR will disappear. Another massive campaign on the subject would probably develop since the groups involved are all interested in substance rather than appearance.
2.
Our trade legislation, both this year and in the future, will face increased difficulty on the Hill because of the widespread desire in Congress (including such key people as Wilbur Mills and John Byrnes) for STR leadership. Our legislative proposals will face enough problems without adding this one.
3.
The foreign policy consequences which were avoided for the moment by the decision to retain STR will appear all over again. They would be even worse now because the protectionist image of Commerce has been greatly intensified by the Stans approach on textiles.
4.
STR will be severely handicapped in regaining the top-quality staff which is needed somewhere in the Government if we are to make substantive progress on trade policy generally and move toward a far reaching Nixon Round, the rationale for the appointment of our blue ribbon commission and intensified internal study per NSSM 49, during this Administration. Such a staff will never develop through the State system or be attracted by Commerce.

At least three things need to be done soon to give substance to the apparent STR decision. First, the President should invite Gilbert along with Stans to report to him on the European trip and to discuss plans for the coming Far East trip. This would enable Gilbert to meet the President and enhance his stature both internally and publicly, particularly if the White House announced their meeting.

  • Second, STR should remain physically in its present location. This will require either that Stans be convinced not to exercise his option to [Page 516]move STR into the Commerce building (essentially on the grounds that it would avoid major Congressional problems and keep the State and Agriculture Departments and foreign emissaries off his neck) or that the President instruct Stans that he has reconsidered his decision and prefers that STR remain in its present location.3
  • Third, STR’s substantive leadership needs to be asserted. Our NSSM which places STR in the chair of our long-term internal study accomplishes that. In addition, it would be desirable if the President could praise STR or Gilbert personally in a public statement, perhaps in his trade message to the Congress next month.

Recommendation:

I recommend that:

1.
You urge the President to (a) invite Gilbert, along with Stans, to report to him on the European trip and on plans for the Far East trip in early May, with a White House announcement of their meeting; (b) inform Stans that he has decided that STR should remain physically in its present location; (c) take any opportunity that might arise to publicly praise STR and/or Gilbert personally and affirm their leadership of U.S. trade policy.
2.
If you have not already done so, sign the proposed NSSM directing a far-reaching internal study of U.S. trade policy as agreed at the NSC meeting on April 9 to be chaired by STR.4

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 403, Office of the Special Trade Representative. Limited Official Use.
  2. Additional documentation on the President’s decision to keep the Office of the Special Trade Representative in the Executive Office of the President is scheduled for publication in Foreign Relations, 1969-1976, Organization and Management of Foreign Policy, 1969-1972.
  3. On May 19 Kissinger initialed a memorandum to the President with the recommendation: “That STR remain physically, as well as legally, within the Executive Office of the President.” (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 404, Eberle) In a May 21 memorandum, Haldeman told Flanigan that “the President would like you to make clear to Secretary Stans that he does not want the office itself moved. As the Secretary knows, the President will look to Stans for overall supervision of this office, but he feels it should not be moved from its present location and that any attempt to do so would create serious problems on the Hill, among other things.” (Ibid.) The May 19 memorandum is scheduled for publication in Foreign Relations, 1969-1976, Organization and Management of Foreign Policy, 1969-1972.
  4. At the end of this paragraph Haig wrote: “Done” (see Document 199) and added the following decision paragraph with “yes” and “no” options: “Bergsten to do memo to Pres. along above lines.” The “yes” option is checked, presumably by Kissinger. The May 19 memorandum to the President (see footnote 3 above) is apparently the memorandum.