258. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1

    • Your Questions Regarding Our Trade with the Soviets and East Europeans

In your conversation with Ambassador Beam on June 102 you mentioned the need to study the potential for trade between the United States and the USSR over the next two or three years should we further relax some of our trade barriers. Peter Peterson has already quietly begun an interagency study on the U.S. stake in East-West trade and he now has a report.3 The study discusses U.S. trade potential in 1975 as it would be affected by diminution in our export controls, relaxation of financing restraints, granting of most-favored-nation treatment and releasing our shipping restrictions on grains.

You had also asked what prevents us from doing the same as the Canadians in their recent grain deal with the Soviet Union. Your announcement on June 10 that we are suspending the 50 percent U.S. shipping requirement4 means that we will be in a position to do the same as the Canadians. However, as you know, we will face a severe practical problem if Gleason maintains his refusal to allow the East Coast longshoremen to load these ships.5

You asked what we can do to end the restriction on credits to the Soviet Union. The Senate has already passed a new Export-Import bill which eliminates the Fino amendment prohibiting credits to countries such as [Page 771] the Soviet Union trading with North Vietnam.6 The House has just held hearings on this bill and our spokesman informed the subcommittee in low key, according to your directive, that the Administration is still opposed to elimination of the amendment. The subcommittee has rejected our position, but there would still be support for it in the full committee and on the floor of the House. There is some possibility that the House might pass the bill, even over low key Administration opposition, and a change in the Administration position would probably assure House action.

Peterson also has a group looking at a series of steps we could take in the East-West trade area should we wish to do so.7

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 715, Country Files, Europe, USSR, Vol. XIII. Secret. Sonnenfeldt and Johnston forwarded a draft of this memorandum, with Peterson’s concurrence, to Kissinger on June 11. (Ibid.) According to a notation and attached correspondence profile, the President saw the memorandum from Kissinger on June 22.
  2. See Document 255.
  3. In a June 11 memorandum forwarding the report to Kissinger, Johnston explained that Peterson had concluded that “a total relaxation of our East-West trade barriers would improve our balance of payments position by about $500 million in 1975.” Johnston further noted Peterson’s belief that a change of policy, allowing U.S. companies to supply the Kama River Project, might eventually result in $200 million of commercial benefits. (National Archives, Nixon Presidential Materials, NSC Files, Box 715, Country Files, Europe, USSR, Vol. XIII)
  4. See footnote 3, Document 255.
  5. See footnote 5, Document 253.
  6. Under this amendment to the Export-Import Bank Act of 1945, sponsored by Congressman Paul Fino (R–New York) and passed by the House on February 7, 1968, the Export-Import Bank was prohibited from extending export credits to countries trading with North Vietnam, including the Soviet Union. Three days after a Senate vote, the House voted on August 5 to repeal the amendment, giving the President discretionary authority to authorize credits to the People’s Republic of China and other Communist countries. Nixon signed the new bill into law on August 17. For further discussion of the issue, see Foreign Relations, 1969–1976, volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Document 340.
  7. According to his Record of Schedule, Kissinger met Peterson for lunch on June 16 from 1:10 to 2:15 p.m. (Library of Congress, Manuscript Division, Kissinger Papers, Box 438, Miscellany, 1968–76) In a June 18 memorandum to Kissinger, Johnston reported that Peterson had informed his staff that Kissinger was against a proposed telephone call to Henry Ford on the Kama River project. Johnston also noted that Peterson wanted to send a telegram to Moscow, which would “merely inform the Soviets that the U.S. has not come to a decision on this issue.” Kissinger marked this passage and instructed Haig in the margin: “There is to be no separate Peterson communication to Soviets. Al, please make sure. The memo must go through me.” (National Archives, Nixon Presidential Materials, NSC Files, Box 402, Subject Files, Trade, Vol. IV [1 of 2]) The memorandum is printed in Foreign Relations, 1969–1976, volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Document 334.