426. Action Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon1
- Meat Import Policy
You decided on February 21 that, until domestic meat prices came down, you would not sign an Executive Order to prohibit U.S. imports of meat shipped from supplying countries via third countries, mainly Canada (Tab A).2
Meat prices have not declined since that time. In fact, they have again risen slightly. CEA estimates that strong consumer demand and stagnant domestic supply will keep meat prices strong through at least the first half of this year (Tab B).3 Paul McCracken’s jawboning efforts, which you directed at the February 2 meeting on the over-all farm program, have had no success.4
This raises a fundamental issue in terms of our present voluntary restraint program on meat imports. Transshipments via third countries, which would have been prohibited by the Executive Order, are additional to the voluntary restraint level of 1,062 million pounds. They therefore move us toward the 1,098 million pound level at which the Meat Import Act would require you to trigger mandatory quotas. (The Act calls for a quota level of 998 million pounds—a 10% reduction from trigger level and hence extremely inflationary—but gives you authority to set a higher level wherever you might choose. Agriculture estimates, incidentally, that imports would total about 1,400 million pounds if we imposed no controls on them.)
Such transshipments have totaled about 7 million pounds so far this year, raising the estimated level of total imports for the year to 1,069 million pounds—less than 30 million pounds below the trigger point for quotas. They are now coming in at about one-half million pounds per week, but Agriculture fears that they will rise sharply when the trade becomes aware that we are not stopping them. (I have thus informed no one of your decision on February 21.5 However, all of the [Page 1049] suppliers were told that such controls would be part of the 1970 arrangement and may become curious fairly shortly.)
In the present situation, you have three options:
Option 1: Do nothing for the present.
PRO: Avoids inflationary implications of new restraints on meat imports.
CON: Risks a rush of imports when lack of transshipment control becomes known, forcing you to choose, under crisis conditions when tremendous political pressure would be brought to bear, between (a) the even more onerous price and foreign policy implications of mandatory quotas at the statutory level of 998 million pounds, and (b) the domestic political price of raising quotas or waiving import controls altogether.
Option 2: Sign the Executive Order (Tab C)6 now, prohibiting transshipment of meat to the U.S. via third countries.
PRO: Would assure viability of voluntary restraint program, thus avoiding choice cited above.
- —Appears inconsistent with overall anti-inflationary program.
- —Could raise furor among consumers.
Option 3: Use your discretion under the Meat Import Act to trigger mandatory quotas, raising them to a higher level than would be permitted under voluntary restraint program (probably 1,200-1,300 million pounds).
- —Significant anti-inflationary step, both in reducing the price of beef and in psychological terms.
- —Major foreign policy gains, especially with Latin America, Australia and New Zealand.
- —Risks domestic political problems with cattle industry and its Congressional supporters. (They might seek new legislation requiring a lower level of imports, so a corollary of this decision should be commitment to oppose such legislation.)
- —Institution of quotas runs counter to our general trade policy and exposes us to retaliation. (Both would be mitigated, however, by the higher level of imports which would result.)
That you choose Option 3: triggering of import quotas, with the quota level set significantly higher than under the present voluntary restraint program, say at 1,200-1,300 million pounds. (If you choose this option, I will ask Secretary Hardin to prepare the documents to implement the decision immediately.)
Disapprove, prefer Option 1: no action at this time
Disapprove, prefer Option 2: sign Executive Order barring transshipments via third countries (Tab C)
- Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 401, Trade General, Volume I. Confidential. A note at the top of the first page in red pencil reads: “Henry recommends Option #3 under which No Signature required.”↩
- Document 425.↩
- Not found.↩
- See Document 424.↩
- See Document 427.↩
- Not found.↩
- The President initialed this option. At the end of the memorandum he wrote a note for Haldeman: “Have Colson—quietly to talk to cattlemen—only when it appears they will be informed of our decision—& tell them we will move in other directions when prices begin to come down—Tell them if we don’t do this—the consumer lobby will overrun them in Congress. Tell them it is a very modest step.” To the left of the President’s instruction is the stamped date of March 10. On that day the President met with Senators Fannin and Bellmon and Congressmen Brown, Steiger, and Quie from 8:39 to 9:49 a.m., and with Secretary Hardin from 2:58 to 4:05 p.m. (National Archives, Nixon Presidential Materials, White House Central Files, President’s Daily Diary) No record of these meetings has been found.↩