331. Memorandum From the Chairman of the National Security Council Under Secretaries Committee (Irwin) to President Nixon 1

SUBJECT

  • Trade and Travel with the People’s Republic of China

On April 13 you directed that a number of moves be taken to increase personal and commercial contacts between China and the United States.2 I attach at Tab A this Committee’s report of the actions taken to fulfill your instructions as well as certain proposals for your decision which will complete these first steps.3

The following is a brief summary of both the major points of decision as well as the actions already taken by appropriate agencies.

U.S. Exports to China ( pages 1 3 of report)

As you requested, we have reviewed for strategic significance and prepared for your approval at Tab B a list of non-strategic items to be placed on general license for export to China. In carrying out your instructions, we have attempted to produce a meaningful list, both in trade and political terms. About 95% of the items available to the USSR under general license are on the recommended list for the PRC, and some of the remainder are still under review. Omissions include heavy construction equipment of possible military use, overly broad categories which might include items of strategic significance to the PRC, but not to the USSR, and some atomic energy-connected items.

There has been some, relatively minor, disagreement between agencies as to the completeness of this list. The Committee is satisfied, however, that the list at Tab B, with or without the two additions recommended by the Department of State but objected to by the Department of [Page 847]Defense and placed for your decision at the end of the list, will be received as a significant first step in opening trade with China.

We therefore recommend that you approve the list (Tab B) of non-strategic items to be placed on general license for export to China, indicating at Tab B your decision concerning the additional items proposed by the Department of State.4

Special Problem of Wheat Exports ( pages 3 6)

We, except for the Department of Defense, recommend that you approve inclusion of wheat, other grains and wheat flour in the general license list. While the Department of Agriculture, in particular, feels strongly that this recommendation should be adopted, the Departments of Labor and Commerce do not concur unqualifiedly in this recommendation. The arguments pro and con on this issue appear at pages 3 through 6 of the attached report together with a space for you to indicate your decision on page 6.

Public Announcement, Continuing Review, and Liberalization of Exports ( page 6)

Once you have taken your decision we would plan to orchestrate appropriate agency and/or White House announcements in order to capitalize on and reinforce the thus far most favorable international and domestic reaction which your April 14 announcement has generated. For example, the Department of Commerce will make a public announcement in the Export Control Bulletin, and state that there will be a continuing interagency review of items to be placed under general license to the PRC, the additions to be published from time to time. In addition, agencies will operate under the assumption that if individual export licenses are requested for items not on general license to the PRC, such applications will be considered on their merits.

The Department of Defense believes that the entire list of eligible non-strategic items should not be announced on the general list at one time, but should be timed over a period of several months of 50, 25, and 25 percent of the items, contingent on PRC reactions.

The rest of this Committee does not agree with such a phasing of this step. Such an approach would be not only impractical and unrealistic, but quite out of keeping with your announced policy of measured but steady movement to open contacts with the PRC wherever possible.

U.S. Imports from China ( pages 7 11)

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You have stated that upon commencement of direct exports, direct imports from China would be allowed, of “a similar and correlated nature.” In order to emphasize U.S. interest in real, two-way trade, the Committee recommends that you announce an appropriate import regime at the same time the export list is published, making clear, of course, that we are interested in a mutually beneficial trading relationship, one that avoids damage to domestic firms and workers in both countries.

We have carefully considered a large number of possible import control systems, given our concern that Chinese imports not damage in any way American manufactures, particularly in such sensitive commercial areas as textiles or shoes. After a study of such factors as historic and present Chinese trade patterns and already existing self-protection devices including non-Most-Favored-Nation treatment under the tariff, anti-dumping regulations, and the Long Term Cotton Textile Arrangement, we recommend that you approve the issuance of a general license authorizing all imports (not otherwise restricted by legislation) from the PRC, coupled with an announcement that import restrictions may be imposed in the future if trade developments so dictate ( page 10 of the report).

The principal advantage of such a policy is that it would permit the maximum amount of trade development and would hopefully elicit the most positive political and commercial response from the PRC. We would, of course, keep a careful watch on imports and be prepared quickly to take remedial action to prevent damage to U.S. concerns. We have listed for your consideration two other options, more restricted in nature, at pages 10 and 11 of the report.

Recommendation

License all imports from the PRC under a general license subject to possible future dollar quota.

Other Implementation Steps ( pages 12 and 13)

We have prepared regulations carrying out your instructions on the following three steps: 1) relaxation of dollar controls; 2) ending of bunkering restrictions; 3) transport of Chinese cargoes by U.S. carriers.

The new regulations on these topics were announced on May 7 and no further decisions from you are required on these points.5

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With respect to travel, we feel your public statement on April 14 that “the United States is prepared to expedite visas for visitors or groups of visitors from the PRC to the United States” requires no further supplemental action at this time.6

Further Review and Coordination ( page 13)

The Committee will continue to coordinate implementation actions in this field and will, as you requested, provide you with an analysis of the results of these initial steps after a trial period of four months—that is, by mid-August 1971.

John N. Irwin II
  1. Source: National Archives, RG 59, S/S Files: Lot 83 D 276, NSC-U/DM 60B. Secret. Attached to a May 13 transmittal memorandum from Hartman to the Deputy Secretary of Defense; the President’s Assistant for National Security Affairs; the Director of Central Intelligence; the Chairman of the JCS; the Under Secretaries of Treasury, Commerce, and Agriculture; the Deputy Attorney General; and the Special Trade Representative.
  2. Document 329. That NSDM requested a follow-up report within 4 months. On April 19 Kissinger sent NSSM 124 to the Secretaries of State and Defense and the Director of Central Intelligence requesting on the President’s behalf a study of “Next Steps Toward the People’s Republic of China.” (National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 124) That NSSM made no specific reference to trade issues, but did call for a Response by May 15, 1971.
  3. Neither tab is printed.
  4. None of the decision options in the memorandum is checked or initialed.
  5. See Department of State Bulletin, May 31, 1971, pp. 702-704.
  6. See footnote 1, Document 329.