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

309. Action Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon¹

Washington, December 11, 1969.

SUBJECT

• Proposal on China Policy

I have worked out with Elliot Richardson the next steps you might take to further relax economic controls against Communist China. Secretary Rogers has sent over a memorandum outlining these proposals (Tab A) which are in line with NSDM 17 (Tab B).²

The proposals are:

1. Remove Foreign Asset Control (FAC) restraints on foreign subsidiaries of United States firms on transactions with China regarded as non-strategic by COCOM (approved by you in principle in NSDM 17, June 26, 1969).

2. Eliminate the present restrictions on U.S. business participation in third-country trade in presumptive Chinese goods. (This move is intended to enable American businessmen to deal in goods which, though not of Chinese origin, are on the Chinese “presumptive” list—such as certain Hong Kong-made products.)

3. Modify slightly your approval in June allowing the non-commercial purchase of Chinese Communist goods by Americans traveling or resident abroad by removing the $100 ceiling and the requirement that non-commercial imports from China enter the United States as accompanied baggage.

These measures would not make commodities available to the Communists which they cannot already purchase. The actions might lead to objections from the Republic of China, but they are clearly within our China policy as we have described it to GRC leaders, and they would not affect Taiwan’s vital security interests.

Treasury concurs and believes that the actions can be taken by executive action.

In view of the present situation and the recent moves made by Communist China, I believe this is a good step to take at this time in response to tomorrow’s meeting in Warsaw. The impediment which has led you to defer execution of NSDM 17 was the problem of getting the East-West Trade Act through Congress. The bill is expected to come up next week, and will probably be passed.³ The actual promulgation of the new rules on China should not be made until that bill is disposed of, one way or another.

Recommendation:

That you approve the recommendations for the relaxation of certain economic controls toward Communist China, as explained above. That the actual promulgation of these changes be deferred until Congress has acted on the East-West Trade Act.⁴

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 337, HAK/ELR Meetings. Secret; Sensitive. Attached to a December 18 memorandum from Haig to Kissinger with items for him to discuss with Richardson on December 18. Haig’s first item was to discuss how the State Department intended to implement the President’s approval of the three steps on China trade. Kissinger indicated he did discuss this item with Richardson.
2. Documents 308 and 302, respectively.
3. The Export Administration Act of 1969 was enacted December 23; see Document 311.
4. The President initialed the Approve option and wrote below it: “Depending on Warsaw meeting analysis.” Below that is the handwritten date of December 15. A note by Kissinger at the top of the first page of the memorandum reads: “Al—Let’s move on this. I’ll call Richardson.”