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

SUBJECT

  • Next Steps to Deal with Trade Situation

Decisions

After you left the meeting last night,2 the group decided to adopt your proposal—to let the trade bill become a “Christmas tree” and veto it. The group also made the necessary corollary decision to take all steps necessary to try to avoid an override of the veto.

It was unanimously agreed that there was no real alternative:

  • —It would be impossible to avoid getting any legislation, since the Congressional momentum has gone so far.
  • —No “deal” which we might possibly be able to make, such as accepting a “basket clause,” would be any good, even in place of mandatory quotas on particular items: it would catch too many items and would place the burden completely on the President.
  • —As you said, it would not be possible to delay by starting up the negotiations again.3

To begin to implement the strategy adopted, the following steps were decided:

  • —A delegation (Stans, Flanigan, McCracken, Bergsten) will visit Congressman Byrnes today to reaffirm the President’s statement of last Thursday4 that the bill courted veto even before yesterday’s action on ASP; the ASP step moved it closer to veto;5 and that any additional protectionist amendments to the bill would continue the move in that direction.
  • —Someone (probably Stans) will inform the textile industry that we are shocked by its failure to support our trade position in return for our support for textile quotas, and warn them that unless quota legislation [Page 615]is limited to textiles that they may wind up with no protection at all because of a veto.
  • Harlow, Flanigan and others will begin immediately to mobilize the free trade groups, retailers, etc. to publicize the disastrous implications of the pending legislation.
  • —At Harlow’s suggestion, we should seek an early occasion for a Presidential statement on the issue: partly to try to head off the bill, but even more to begin preparing the public for a veto.6

Harlow made two interesting comments after you left: that in his judgment this was the “most Presidential issue” which we now face, and that the eventual Presidential veto should be carried to the nation by television a la the veto of the HEW appropriations bill last January.

Comments

From the standpoint of U.S. foreign policy, successful implementation of this strategy would undoubtedly be the best outcome. Any bill that passes the present Congress at this time is bound to set back our trade and foreign policy severely. No bill—either by delay or by veto—would clearly be preferable.

There are three significant risks to this strategy:

  • —The bill may come in just lacking sufficient protection to justify a veto.
  • —The politics of the situation will make the veto extremely difficult at the moment of decision, however many the items in it, because of textiles and the November election.
  • —The veto may be overridden.

You will thus probably have to make a major contribution to the effort to carry out the strategy. Needless to say, the enormous foreign policy implications of the issue justify your doing so.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 401, Trade General, Volume II 4/70-12/70. Secret; Exdis.
  2. Not further identified.
  3. Presumably a reference to the failed Japanese bilaterals; see Document 235.
  4. July 9; see Document 238.
  5. The Committee apparently dropped repeal of ASP from the legislation, voiding a Kennedy Round commitment; see Document 243.
  6. During his press conference on July 20, the President said quotas were not in the interest of the United States as an exporting nation, but in view of the breakdown of talks with Japan and others on a voluntary textile quota agreement textile quotas would be acceptable; he said he would veto a bill, however, that applied to other sectors as well. (Public Papers of the Presidents of the United States: Richard Nixon, 1970, p. 606)