340. Memorandum From Ernest Johnston of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Removal of Fino Amendment from Export-Import Bank Legislation

Secretary Stans proposes in a memorandum of July 13 (Tab A) that the Administration indicate privately to several key Congressmen that it would accept an Export-Import Bank bill which drops the Fino Amendment.

The Fino [Amendment] prohibits Export-Import Bank credits to nations trading with North Vietnam and effectively eliminates Ex-Im transactions with Eastern Europe. Senate and House conferees will meet in the next few days, probably early next week, to reconcile differences in the Export-Import Bank bill. The Senate version dropped the Fino Amendment, the House retained it. (Both versions meet the President’s goal of eliminating Ex-Im from budget constraints.)2 Secretary Stans maintains that the only reason the House retained the Fino Amendment was because many members had the impression that the Administration was adamantly opposed to deleting it. (The record of the debate indicates a more neutral Administration position.) Bill Widnall, the House Republican conferee, told Secretary Stans that he expects the conference committee to delete Fino, and he wants an indication of how the Administration will react.

NSDM 993 states that the Administration would oppose Congressional initiatives in the East-West trade field, though “only in a very low key way”. Subsequently you directed that Administration witnesses testify that if the amendment were dropped, over our low key opposition, the Administration would use its authority under the present circumstances only to extend credit to Romania.

Stans’ suggestion is that Commerce inform Senate and House conferees as well as the House Republican leadership that the Administration [Page 866]would support a conference bill containing a repeal of Fino. He believes this indication can be given privately and would not contradict the earlier policy but would erase the previous misunderstanding in the House.

It is not clear that any Administration action is necessary at this point. The Senate may well prevail over the House, eliminate the Fino Amendment from the conference report; and the House may accept this version. However, there is some risk in a “hands-off” approach. Secretary Stans’ proposal would probably insure repeal of the amendment, but it would also effectively constitute a reversal of the Administration policy. Timmons’ staff thinks we may need to be even clearer against Fino.

I do not know your plans for a series of East-West trade moves later this year. If you do expect broad liberalizing changes, we should act now to be able to use Export-Import Bank credits in future dealings with Eastern Europe. Elimination of the Fino Amendment would preserve that option, and the Administration would then be able to extend these credits should it wish to do so. Should it wish not to do so, it would still have the power to withhold these credits. On the other hand, should the House conferees hold firm and the Senate accept retention of the amendment, then the Administration would have lost the option of including Export-Import Bank credits in a package of East-West economic measures. The basic Ex-Im legislation will be renewed at least until 1974, so that repeal of Fino would not be considered before then, except as special legislation.

If you do wish to take advantage of this opportunity, I suggest that Secretary Stans’ memorandum be forwarded to the President with a concurring recommendation. Pete Peterson would also concur. However, if the President agrees, rather than leaving the matter wholly in the exuberant hands of the Department of Commerce, I would suggest that you cable the memorandum at Tab B to Secretary Stans and Clark MacGregor jointly.

Recommendation:

1.
That, if you expect the need for a series of East-West trade moves, you approve preparation of a memo for the President with a positive recommendation.4
2.
That if the President concurs, you send the memorandum at Tab B to Secretary Stans and Clark MacGregor.5
[Page 867]

Tab A

Memorandum From Secretary of Commerce Stans to President Nixon 6

SUBJECT

  • Removal of Fino Amendment from Export-Import Bank Legislation

The Fino Amendment (1968) to the Export-Import Bank Act of 1945 precludes the use of Eximbank credit facilities in transactions involving exports to any country which engages in armed conflict with the United States; or to any other country which furnishes goods, supplies, military assistance or advisers to a country which engages in armed conflict with the United States.

The position of the Administration, as stated in NSDM 99 and an Under Secretaries Committee Memorandum (March 1971),7 is to oppose in low key any modification of the Fino Amendment. The Memorandum further prescribes that if the Congress should nevertheless enact a repeal, then the President would consider authorizing Eximbank credit facilities for our trade with Romania.

The Interdepartmental Study for CIEP, “U.S. Stake in East-West Trade,” demonstrates the need for export credit facilities for Eastern Europe if the United States is to obtain its appropriate share of this market.8

In April 1971 the Senate passed, by 66-1, a bill which, among other provisions, would repeal the Fino Amendment. The House Banking Committee in June 1971 reported out a bill similar to the Senate version. However, when the bill was considered on the House Floor, Representative Chalmers P. Wylie (R-Ohio) proposed an amendment to [Page 868]preserve the Fino Amendment, and this was adopted on July 8 by a vote of 207 to 153. Indications are that the Wylie Amendment was passed because it was believed that the Administration was adamantly opposed to the removal of the Fino Amendment. The House and Senate bills now go to Conference shortly, but possibly Wednesday, July 14.

The Commerce Department’s testimony on the House bill is in accord with NSDM 99, and its legislative comments on both House and Senate bills mildly opposed removal of the Fino Amendment. Assistant Secretary of State Trezise’s testimony on the House bill reflected in addition the Under Secretaries Memorandum which indicated the possibility of extending credit facilities for our trade with Romania. Eximbank President Kearns testified that his agency did not make policy and had no position on the Fino Amendment.

Subject to White House agreement, Commerce proposes discussions with the Senate and House Conferees and the House Republican leadership, to give assurances that the Administration would support the Conference bill if the Fino repeal is included.

Commerce believes that given the early misunderstanding in the House and the importance of retaining for the President the option of extending Eximbank credit to Communist Countries at his discretion, this action is not only desirable but also, given its low key and private nature, does not contradict earlier policy as set forth in NSDM 99. Henry Kearns, President of Eximbank, concurs with this recommendation.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 213, Commerce Volume II 1971. Confidential. At the top of the page, a note by Kissinger reads: “Why can’t we do nothing”; another by Haig reads: “Ernie call me.” Kissinger arrived in San Clemente the morning of July 13 from a trip to Asia and Paris that had included a trip to Peking. (Ibid., White House Central Files, President’s Daily Diary)
  2. Congress approved the Export-Import Bank bill without the Fino Amendment, and President Nixon signed it into law on August 17, 1971. (P.L. 92-126; 85 Stat. 345)
  3. Document 325.
  4. Neither the Approve nor Disapprove option is checked.
  5. Not found.
  6. No classification marking. Copies were sent to Ehrlichman, Peterson, and Kearns.
  7. Presumably a reference to a March 10 memorandum from Staff Director Arthur Hartman to members of the Under Secretaries Committee regarding U.S. economic relations with Romania. Hartman reported the President’s decisions with respect to a December 15, 1970, memorandum from Acting Chairman Samuels. (National Archives, RG 59, S/S Files: Lot 83 D 276, NSC-U/DM 14B) The first of the President’s decisions is the substance of NSDM 99. The second was that if the Fino Amendment were repealed over Nixon administration opposition, administration witnesses should testify that Romania was the only country currently covered by the amendment to which Export-Import Bank loans would be extended at that time. Finally, the Commerce Department was instructed to set up a new export control category for Romania to accord it the same status as Yugoslavia on exports of U.S. goods. (Ibid., NSC-U/DM 14A)
  8. See Document 339.