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

SUBJECT

  • Meat Import Policy

At Tab I is a memorandum for the President on U.S. meat import policy,2 which has been brought to a head by: (1) the need to determine the allowable import level for the fourth quarter; (2) Honduras exceeding its permitted export level under the present voluntary restraint program; (3) a letter to the President from Prime Minister Gorton;3 (4) [Page 1014]Prime Minister Holyoake’s raising the issue with the President while here recently;4 (5) the forthcoming IA-ECOSOC meetings5 at which this will be an important issue. A decision is needed within a couple of days because the Secretary of Agriculture is required by law to take a position on meat imports on September 30 (which can slip a day or two).

It is impossible to temporize because of the Honduran overshipments: We must either crack down on them or increase overall imports to provide a cover for their violations. In addition, postponing a fundamental decision would carry us past Gorton’s election and the IA-ECOSOC meetings because the immediate decision will determine policy for the fourth quarter and, for market reasons, we could not then announce a change in policy until the end of the year.

The issue is an analytically simple tradeoff between foreign policy-consumer interests and domestic producers. The main elements are:

1. Latin America

The major immediate problem is with Honduras. Unless we liberalize, we will have to hit them hard. This would be blown out of proportion in Latin America generally and sour the atmosphere for IA-ECOSOC, especially since Latins are focusing heavily on trade in that context. Guatemala and Nicaragua have also officially asked for increased allocations although they have taken steps to stay within their present ceilings and avoid U.S. retaliation.

These individual Central American countries are minor suppliers but Latin America as a whole accounts for about 20 percent of our beef imports. Some of their cattle industries have in fact been supported by our AID program as an important step in diversification of their economies. The Latin Americans asked for increased access to our meat market in the CECLA document and the Rockefeller Report recommends that we meet this request.

2. Australia

Gorton has personally asked the President to allow an increase in Australian meat exports to the United States in time to boost Australian meat prices before his October 25 election. He notes that meat is Australia’s leading export to the U.S.; that Australian meat does not compete directly with U.S. meat; that U.S. prices of imported meat have continued to rise; and that meat prices in Australia could drop sharply if the U.S. does not permit increased imports because Australia has already met its permitted level for the entire year.

[Page 1015]

John Holdridge adds that Gorton’s concern over the possible adverse political effects is indicated by his personal letter to the President. Although he has used this device before, this time it probably does denote a sense of urgency—for the first time in years, the Australian Labor Party seems to be building up a real political challenge and Gorton may need every vote he can get.

3. New Zealand

Holyoake made meat, along with Vietnam, the major topic in his recent discussions with the President and he reported upon returning home that increased trade opportunities were the major result of his visit. He is facing general elections on November 29 and is in trouble with sections of the New Zealand electorate as a result of his strong support for our Vietnam policy.

The New Zealand Embassy presented us with an aide-mémoire last week to press the case.6 They undoubtedly regard meat as the first test of Secretary Rogers’ recent pledge that we will take their views into account in forming our own economic policies.

4. General Foreign Policy

(a)
Under any solution other than Option E, which would eliminate all controls, we will face the perennial problem of allocating quotas or “voluntary” restraint levels. Both the traditional suppliers (Australia, New Zealand, Ireland, and Mexico) and the late starters (the other Latin Americans) feel that their present shares are too small. The only way to allocate without raising major problems with some supplier is to increase the size of the overall market so that each will gain in absolute terms.
(b)
Liberalization of meat imports would be the first concrete step in pursuit of the Administration’s avowed interest in freer trade and would therefore be applauded generally as well as by the direct beneficiaries.

5. Domestic

There are several strong arguments from the domestic side in favor of increasing imports:

(a)
Prices of the type of meat which is imported have continued their sharp rise although prices of domestically produced meat have fallen from their June highs. Greater imports would thus contribute to the overall anti-inflationary effort (although their effect would be marginal and largely symbolic). It is precisely this kind of situation under which the present Meat Import Act permits an increase or suspension of the statutory quotas (Options D and E, respectively).
(b)
Imported meat is mainly ground into hamburger and frankfurters, and thus primarily helps lower income groups.
(c)
Imported meat differs in quality from domestically produced meat and does not directly compete with it. The complaints of our cattle industry are therefore not very justifiable.

Recommendation:

With the concurrence of Pete Vaky and John Holdridge, I strongly recommend that you recommend to the President that he choose Option E—suspension of the quotas. This course is favored by State, CEA, and, of course, by Consumer Representative Mrs. Knauer.

Secretary Hardin strongly opposes any liberalization, however, and opts for A. It can be safely predicted that Bryce Harlow and Peter Flanigan will agree with him. (The memorandum for the President anticipates these views.) I am not sure where Arthur Burns would come out.

Because of this strong opposition, we recommend a fallback if necessary to Option B—which would allow a 5 percent increase in imports under the present voluntary restraint system. This would avoid a confrontation with Honduras and give something to all of the suppliers. It would cause allocation problems but at least in the context of an increased total. It would not hurt the domestic cattlemen although they can be expected to protest anyway. This position is favored by Commerce and Treasury, neither of which is very close to the issue, however, and is acceptable to State, CEA, and STR.

I recommend that you pursue Option E, with Option B as a fallback, with the other relevant parties in the White House—Harlow, Flanigan and Burns—or authorize me to do so for you.7

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 351, Meat Import Policy. Confidential. Vaky and Holdridge concurred.
  2. Not found.
  3. See footnote 2, Document 418.
  4. See Document 405 and footnote 2 thereto.
  5. See footnote 2, Document 116.
  6. Document 405.
  7. At the top of the first page of the memorandum is the handwritten note: “OBE 9-30-69 HAK’s office.” The President met with Hardin, Whitaker, and Harlow from 4:40 to 5:25 p.m. on September 29. (National Archives, Nixon Presidential Materials, White House Central Files, President’s Daily Diary) According to an October 16 memorandum from Bergsten to Kissinger, the President asked Secretary Hardin to work out an increase in meat imports so he could give something to Gorton and Holyoake; pursuant to that request Hardin consulted with Congress and the cattle industry. (Ibid., NSC Files, Subject Files, Box 351, Meat Import Policy) See Document 409.