255. Memorandum From Secretary of State Rogers to President Nixon 1

SUBJECT

  • Proposed Action at June OECD Ministerial Meeting

I

On June 7 and 8 the Organization for Economic Cooperation and Development will have its tenth annual Ministerial meeting, which I will be the first American to chair.

You will recall that the OECD is the successor to the Organization for European Economic Cooperation set up to administer the Marshall Plan. It is now our principal forum for economic policy coordination among the industrialized countries of the free world.

The meeting comes at a time when differences on economic issues are troubling our relations with our major allies. A strong protectionist tide is running in the Congress. Business, labor, and farm groups are uneasy about the economic impact of enlargement of the European Community, and they fear the competitive strength of Japan. There is real danger that growing economic differences may impair the ability and the will of the major industrial countries to continue to cooperate effectively.

I think that it would be unwise to let matters drift.

The tenth OECD anniversary meeting offers an opportunity for the major countries to begin the process of dealing constructively with the world economy of the 70’s.

I have in mind that the Ministers would have the Organization set up a Special Group of high-level government representatives to examine current and prospective international economic problems and to recommend methods and programs for dealing with them.2

II

[Page 653]

The OECD is the appropriate place for this effort. Its membership includes all the countries of Western Europe plus Japan and Canada. Australia will soon be a member. We have for over a decade been working together successfully in this forum on the entire range of international economic problems. Furthermore, the OECD gives us maximum flexibility—on composition, timing, publicity, and follow-through.

The Special Group would consist of representatives from the United States, the European Community, the United Kingdom, Japan and one or two others. Our representative could be a senior government official or a distinguished private citizen. The Special Group would make its report to a Ministerial meeting at the next regular session in the Spring of ′72 or at a special session. We would give the initiative as much or as little publicity as we might think desirable. Our commitment would be limited: the Special Group would have a mandate to study and recommend, not to negotiate or decide.

The action would be timely. It would enable the Administration to demonstrate that it is not marking time in the face of profound changes in Europe and Japan, but is actively preparing for further future initiatives important to our economic interests.

III

Our overall objective is to have the Special Group develop an agreed international economic strategy for the ′70’s, tailored to the emerging economic power relationships among North America, Europe and Japan.

The Group would be expected to identify the major problem areas in the international economy and, after studying various feasible approaches, to recommend procedures and programs to cope with these problems.

For our part, we would have certain specific objectives:

1.
Agriculture. To prepare the way for a negotiation on agriculture which would increase the opportunities for efficient farmers in the US, Canada, Argentina, and Australia to export their crops to commercial markets.
2.
Tariffs. To find agreement on means to reduce the tariff discrimination against us that will follow from an enlarged European Community with special links to the European neutrals.
3.
Non-tariff barriers. To reach a consensus on the non-tariff barriers the removal of which we can mutually and profitably negotiate.
4.
Preferential trade arrangements. To check the proliferation of special preferential trade arrangements, like those of the European Community with some of the countries of Africa and the Near East; and to move toward a system in which all the rich countries grant all the poor countries the same benefits.
5.
Japan. To bring the Japanese economy into a closer relationship with the other industrial powers, and thereby to reduce the unduly large degree to which Japan’s commerce is linked to the United States.
6.
Domestic policy coordination. To improve the coordination among the advanced countries of their domestic economic policies, especially with respect to the problem of inflation.
7.
Aid. To expand the area of understanding and agreement concerning your initiative for a multilateral emphasis in foreign aid.

Obviously, other countries might have further ideas, as, for example, questions about multinational investments. I see no reason why we should not be ready and willing to entertain any serious suggestions from any quarter. The Special Group would be a forum in which we could have a responsible discussion on any important matter.

IV

The international examination by the Special Group would move in tandem with our internal study of these matters within the CIEP framework. Under Pete Peterson’s direction, the CIEP would define our positions and provide guidance to our representative on the Special Group. He would then feed back into the CIEP process the constraints, concerns, and creative inputs of the Europeans and the Japanese.

This is exactly what we did in developing the allied defense strategy for the ′70’s, where studies in the NSC proceeded along with an examination of the same issues by the NATO.

The end result of the process would be an action program for the consideration of governments—a program consisting of guidelines for trade negotiations, procedures for policy coordination, and rules of international economic conduct. Governments would make the decisions, with complete flexibility on timing as well as substance throughout the process.

V

I propose that we begin consultations with our principal allies now so as to assure that the Ministers come to the June meeting prepared to set up the Special Group.3 And because of rising Congressional concern [Page 655]over foreign economic relations, I intend to involve the Congress from the beginning.

I will be in Europe next week for SEATO and could begin the process of consultations at that time. Nat Samuels will be in Europe on other business at the same time. We would follow then with consultations with the Canadians, Japanese and others.

On my return from Europe I propose to consult with the Congressional leadership about taking a few key members from each House with me to the OECD.

William P. Rogers
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 218, CIEP. Confidential.
  2. An attached April 27 memorandum from Bergsten to Kissinger informed him that Peterson endorsed Secretary Rogers’ proposal. Bergsten thought it a good idea in principle, but saw problems: would the EC Commission or individual states be represented; how would Canada and other “middle powers” be represented; and how to deal with the LDCs, which would be represented in GATT where the negotiations would take place and would be resentful of launching such an effort from the OECD “rich man’s club.” Bergsten expressed his opinion that the initiative would not be fruitful and that in any event the next trade initiative should come from Europe or Japan. He noted that the difficulties would quickly become apparent to the State Department, which would retreat from the proposal, but he nonetheless did not oppose Rogers’ proposal. On this memorandum Kissinger initialed his approval for the President.
  3. Rogers and Samuels spoke in favor of such a group in their statements at the June 7-8 OECD Ministerial, and the Ministers agreed to establish a high-level group in the OECD to study longer-term trade and related problems and set out options, taking cognizance of work underway in the GATT. See Department of State Bulletin, July 5, 1971, pp. 11-21. On August 5 President Nixon announced the appointment of William D. Eberle as U.S. Representative to the OECD High-Level Trade Group. (Weekly Compilation of Presidential Documents, August 9, 1971, p. 1129) Eberle was also subsequently nominated and confirmed by the Senate on November 3 as the new Special Representative for Trade Negotiations.