216. Memorandum From the Special Representative for Trade Negotiations (Gilbert) to President Nixon 1

SUBJECT

  • Tariff Preferences for Less Developed Countries (NSSM 48)

REF

  • NSC Under Secretaries Committee—Memorandum to the President—Chairman’s Summary—October 8, 1969

I have just seen the final version of the Memorandum (Chairman’s Summary) under reference.2 Two points which I have made are not, I feel, reflected in the memorandum with sufficient clarity and force:

1.
There must be United States access to less developed country markets on equal terms with other developed countries as a prerequisite to United States participation with other developed countries in a preference scheme. The United States should make it clear that it would not give preferences to other countries which discriminate against U.S. exports in favor of other developed countries. It is costly for developing countries to buy from preferred suppliers rather than from those which are most competitive. It is not reasonable for the United States to defer to the principle and practice of those West Europeans which have in the past insisted on preferences for their products as a condition for their aid. There is now an opportunity to negotiate an end to these “reverse preferences,” to the mutual benefit of the developing countries and of the developed countries (including the United States, Japan, Switzerland, etc.) now suffering net disadvantage from discrimination. [Page 562]Switzerland and the Nordic countries have made their preference offers conditional on a satisfactory solution to this problem. The United States can hardly fail to do the same. Above all, the Administration should recognize in advance the extreme difficulty—if not the impossibility—of obtaining Congressional approval for preferential reduction of United States tariff duties in favor of countries which themselves practice systematic tariff discrimination against United States exports.
2.
As a second United States prerequisite to participation in a preference scheme, all LDC’s should have equal access to DC markets for all preferential imports under the scheme. Since the UK, the EEC and the Nordic countries have proposed to extend duty-free treatment to all LDC’s for all or nearly all products included in a general scheme, United States agreement to accord zero-duty preferential entry would contribute an important common element to the scheme. Duty-free entry for LDC products would meet the LDC’s request for the elimination of tariff handicaps in DC markets, would leave no room for further LDC requests for duty reductions, and would tend to limit tariff discrimination against Latin Americans and others excluded from British Commonwealth and EEC preferential arrangements. I do not advocate a zero-duty preferential scheme in the belief that it would give greater trade benefits to LDC’s than some other scheme. It might or might not do so, depending upon the trade-restrictive effects of initial exclusions and of other measures applied to safeguard American industry. (Here it is important to take into account the trade and investment effects of preferences and the probable aggravation of the “runaway plant” problem with Mexico.) I consider that it will be important for the Administration to be able eventually to go to the Congress with a scheme that can be advocated not only as conferring benefit on LDC’s but also as
  • —a common effort by DC’s to coordinate and rationalize their trade relationships with LDC’s;
  • —an internationally accepted decision to eliminate discrimination against the United States and other developed countries in many LDC markets for manufactures and semi-manufactures; and
  • —a common effort to reduce discrimination by DC’s and groups of DC’s against LDC’s not associated with them in special preferential relationships.

I make these two points here because I feel that the policy recommendations expressed in Section IV (pp. 4-5) of the Chairman’s Summary do not express the two principles in the form in which your decision should ultimately guide our negotiators and be presented by them to other governments.

Carl J. Gilbert
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 404, Trade Preferences for LDCs. Confidential.
  2. Document 214.