Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

209. Memorandum From the Deputy Administrator of the Agency for International Development (Poats) to Curtis Farrar of the Office of Program and Policy Coordination, Agency for International Development¹

Washington, September 4, 1969.

SUBJECT

• Under Secretary’s Committee Meeting on Tariff Preferences for LDC’s

The meeting resulted in the following decisions:²

1. Unanimous recommendation to the President that the United States participate with other OECD countries in offering tariff preferences to LDC’s.

2. The President will not be asked to decide on either such ambiguous policy guidance as “a very liberal” or “very restrictive” scheme or, on the other hand such explicit guidance as the selection of one or more of the alternative detailed schemes presented in the draft NSSM-48. Rather, the President should be given a list of essential criteria or guidelines of an equitably shared OECD offer to the LDC’s. On the basis of this formulation and Presidential endorsement of it, interagency negotiating instructions could then be developed without returning to the President.

3. A working group organized by State E will attempt promptly to draft this brief statement of criteria and, to the extent possible, indicate the orders of magnitudes of impact on U.S. industries and of benefits to LDC’s.

During the meeting, the Commerce Department gave assurances that it would not press for a very restricted scheme and would consider sympathetically a set of protection mechanisms which would obviate the need for many—or perhaps any—commodity exceptions. Before the meeting, Nat Samuels and I hastily drafted a list of criteria, which we did not recite at the Under Secretary’s Committee meeting, which included:

1. Equitable sharing among DC’s of the import impact.

2. Uniform treatment of all LDC’s, in effect creating a separate most favored national group.

3. Uniform 100% tariff concession on all manufactured goods, i.e., no exception list, but without prejudice to existing QR’s.

4. Severe initial quantitative protections with provision for steady growth along the lines of the EEC tariff quota proposal.

5. Limitations on the opportunities for any single LDC to unreasonably exploit advantages, along the lines of the “competitive need” scheme.

6. A time limit on duration long enough to encourage LDC’s to gear up for exports but short enough to permit reconsideration of the scheme, its coverage or eligible LDC countries, so as to head off any near term demands for changing it.

I don’t know whether Nat would agree to all these hastily enumerated ideas on further reflection, or whether they are all sound. But any opportunities we have to participate in work with Worthington³ in the formulation of the paper, these may be helpful to Mike Roemer⁴ as suggestions for consideration. It seems to me that what we want to do is to get the principle of tariff preferences established and a program started and to build into that program both assurances to the LDC’s of growing trade opportunities and assurance to U.S. industry of controls on the in-flow of cheap goods both as to quantities and timeframe of the U.S. market adjustment. No scheme which makes a big psychological splash with the LDC’s will get through the EEC or the U.S. Congress. No scheme which pretends to offer major economic benefits to the LDC’s will in fact sustain this illusion very long. The best approach is to make clear from the outset that this is only a modest stimulus to the LDC’s development and a modest contribution by affected industries in the developed countries. There was a general agreement at the meeting that the United States should not be in the headlines as the leading champion of the plan or as a source of publicity creating false expectations among the LDC’s.

Rutherford M. Poats ⁵

1. Source: Washington National Records Center, Agency for International Development, AID Administrator Files: FRC 286 73 A 518, ECF 4 International Trade FY 70 September 1969. Limited Official Use.
2. The meeting was held on September 4; see Document 208.
3. Presumably Howard L. Worthington (E/OT).
4. Assistant Chief, Program Policy Division, Office of Program and Policy Coordination, Agency for International Development.
5. Printed from a copy that bears this typed signature.