202. Editorial Note

In Spring 1969 the Nixon administration was considering its overall approach to U.S.-Japan relations in the context of NSSM 5, “Japan Policy,” January 21, 1969. In late April 1969 it was decided that the security aspects of the relationship would be discussed by the National Security Council on April 30, and the economic aspects on May 7 on the eve of Commerce Secretary Stans’ mission to the Far East. See Foreign Relations, 1969-1976, volume III, Document 20.

On May 1 NSC Staff Secretary Jeanne Davis distributed a paper entitled “U.S. Trade Mission to the Far East” for consideration at a meeting [Page 524]of the Review Group on May 2. She noted that the subject was also on the agenda for the May 7 NSC meeting. (National Archives, RG 59, S/S Files: Lot 71 D 175, 5/7 NSC Meeting)

On May 2 Joseph Greenwald sent Richard Pedersen a memorandum for his use at the Review Group meeting. Greenwald noted that the background and trade sections of the NSC paper had been “lifted completely from NSSM 5.” “The section on textiles resembles the discussion in NSSM 16 on trade policy. The section on foreign investment is new.” Greenwald commented that the issues the paper raised did not require decision prior to Stans’ mission to the Far East. He thought the options on textiles were not realistic and that it was not necessary at that time to decide on a multilateral versus a bilateral approach. Greenwald believed that Stans should make clear that the textile problem was serious, but should not push so hard on the preferred multilateral approach that it would be difficult to pursue alternatives if it proved impossible to negotiate the multilateral approach. (Ibid., S/S Files: Lot 80 D 212, NSSM 16)

No record of the May 2 Review Group meeting has been found, but a May 2 memorandum from Pedersen to John Irwin and Nathaniel Samuels reported on the meeting. Pederson noted that a slightly revised paper would be available for the May 7 NSC meeting. On the issues, he reported: “The sharpest sparks still arise on the textile quotas which are clearly unpopular among most of the economists except the Commerce people,” but there seemed to be “general agreement that the Japanese are not doing their share in the U.S.-Japanese economic relationship in general.” Pedersen commented that it was agreed that Stans should indicate a preference for the multilateral approach, but not pursue it too hard, and that no decisions on next steps were required before Stans’ trip. (Ibid., S/S Files: Lot 71 D 175, 5/7 NSC Meeting)

On May 3 Staff Secretary Davis distributed a revised paper for the May 7 NSC meeting under cover of a May 3 memorandum to the Offices of the Vice President, Secretaries of State and Defense, and Director of Emergency Preparedness (with copies to the Secretaries of the Treasury and Commerce, the Special Trade Representative, and other agency heads). (National Security Council, Secretariat, Box 84, 5/7/69 Joint NSC/Cabinet Committee on Economic Policy Meeting-FE Trade Mission)

On May 5 John Petty sent Secretary of the Treasury Kennedy a briefing memorandum for the May 7 NSC meeting. Petty commented that “the paper does not adequately reflect the basic difference between the factors which influence U.S. and Japanese policies regarding their trade relationship. Military and political objectives predominate in the formation of U.S. policies while economic and financial factors primarily [Page 525]determine Japanese policies… . you might say that the present allocation of costs and benefits of our relationship with Japan is not viable from the U.S. side. The present large and growing U.S. trade deficit with Japan, in the context of Japan’s flagrant restrictions on imports of manufactured goods and undervalued exchange rate is simply unacceptable.”

Regarding textiles, Petty endorsed a preference for a multilateral solution, but preserving a bilateral option. He noted that “the only viable position that we have with regard to textiles is that it is basically a political problem. Unless an international solution can be found, the Congress will enact restrictive legislation. Such legislation would undoubtedly be more restrictive than a multilateral agreement. Once the dam is broken, there is also the danger that sentiment for protectionist legislation will snowball and result in additional import restrictions.” Petty concluded that there was no need for a final decision on U.S.-Japan relations prior to Stans’ trip. (Washington National Records Center, Department of the Treasury, Secretary’s Memos/Correspondence: FRC 56 74 A 7, Memo to the Secretary May-June 1969)

In a May 6 memorandum to President Nixon, Kissinger briefed the President on the upcoming NSC meeting. Among other things Kissinger wrote: “The basic issue is that we cannot expect Japan to meet all of our requests fully and quickly, since we are not offering them anything on the economic front,” unless the administration overtly threatened Japan with harsh economic sanctions if it refused, which would “seriously damage” the overall relationship. “We could enhance the likelihood of Japanese cooperation by providing concrete evidence of our commitment to further trade liberalization, e.g., by early submission of the trade legislation already decided perhaps sweetened with additional concessions tailored to specific Japanese interests.” He believed, however, that the administration was not yet to the point where its priorities among economic requests from Japan had to be determined, and he suggested that “any position taken now should leave us complete flexibility in setting those priorities in the future. A low-key exploratory approach by Secretary Stans on his trip would be most consistent with this conclusion.” Attached to this memorandum is an “Analytical Summary” of the NSC paper and an “Issues for Decision” paper. (National Security Council, Secretariat, Box 84, 5/7/69 Joint NSC/Cabinet Committee on Economic Policy Meeting-FE Trade Mission)

The National Security Council met with the Cabinet Committee on Economic Policy on May 7 from 11:16 a.m. to noon. (National Archives, Nixon Presidential Materials, White House Central Files, President’s Daily Diary) No record of the meeting has been found beyond [Page 526]Alexander Haig’s handwritten notes. (National Security Council, Secretariat, Box 84, 5/7/69 Joint NSC/Cabinet Committee on Economic Policy Meeting-FE Trade Mission)