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14. National Security Decision Memorandum 171

TO

  • The Secretary of State
  • The Secretary of the Treasury
  • The Secretary of Commerce

SUBJECT

  • Relaxation of Economic Controls Against China2
[Page 40]

The President has decided, on broad foreign policy grounds, to modify certain of our trade controls against China.3 He has decided, in principle, that we should:

(1)
Remove the restraints in the Foreign Assets Control regulations upon foreign subsidiaries of U.S. firms on transactions with China that are regarded as non-strategic by COCOM.4
(2)
Modify the Foreign Assets Control regulations prohibiting purchase of Communist Chinese goods to permit Americans travelling or resident abroad to purchase Chinese goods in limited quantities for non-commercial import into the U.S.
(3)
Modify the administration of the Foreign Assets Control regulations and Export Controls to permit general licenses for export of food, agricultural equipment, chemical fertilizer and pharmaceuticals.
(4)
Follow these steps, at the earliest appropriate time, by modifying import and export controls in non-strategic goods to permit a gradual development of balanced trade.

The President desires early implementation of these decisions. He has, therefore, directed that the Under Secretaries Committee supervise [Page 41]the preparation of the following documents, to be submitted to him by July 7, 1969.

(1)
Implementing regulations (to be developed by State, Commerce, and Treasury);
(2)
A press and diplomatic scenario (to be developed by State);
(3)
A scenario for Congressional consultation (to be developed by State and Treasury).5

The President has directed that until he decides when and how this decision is to be made public, the SECRET/SENSITIVE classification of this project be strictly observed.

Henry A. Kissinger
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–210, NSDM Files, NSDM 17. Secret; Sensitive. Copies were sent to Laird, Helms, and Wheeler.
  2. National Security Study Memorandum 35, “U.S. Trade Policy toward Communist Countries,” March 28, called for study of “policy towards COCOM, U.S. differential controls, trade with Eastern Europe, Asian Communist and Cuban trade embargoes, and extraterritorial effects of trade controls.” The actual study and discussion that followed focused upon Eastern Europe and the Soviet Union, purposely excluding Cuba and Asia. (NSSM 35, March 28; ibid., Box H–142, NSSM Files, NSSM 35) The paper resulting from NSSM 35, as well as supporting materials, are in National Security Council, Secretariat Files, Senior Review Group Meetings, May 7, 1969. NSSM 35 and related papers are scheduled for publication in Foreign Relations, 1969–1976, volume XXXI.
  3. On June 11 Sneider informed Kissinger that in conversations with Green and others, Nixon showed he was “interested” in China policy and “seemed to favor a few short- term steps which would not offer real prospect of reciprocity, such as relaxation of trade and travel controls.” (Memorandum from Sneider to Kissinger, June 11; National Archives, Nixon Presidential Materials, NSC Files, Box 957, Haig Chronological File, HaigChron–June 1969) This effort had many similarities to attempts to modify trade and travel policies during the last months of the Johnson administration. See Foreign Relations, 1964–1968, vol. XXX, Documents 302306, 313, 328, and 336.
  4. On June 21 Richardson informed Kissinger of four economic restrictions that could be lifted. He also detailed benefits of these changes: 1) “remove the irritant which extraterritorial aspects of our trade controls create in our relations with our allies,” 2) indicate desire for increased contacts with the PRC, 3) simplify administrative procedures and remove an irritant to Americans traveling overseas, and 4) “remove elements of our policy which have little or no effect on China.” (Memorandum from Richardson to Kissinger, June 21; National Archives, Nixon Presidential Materials, NSC Files, Box 957, Haig Chronological File, HaigChron–June 1969) Attached to another copy of the memorandum is a note from Richardson suggesting that a NSDM would be the best way to implement these changes, and that the Departments of State, Treasury, and Commerce could develop a plan for media, congressional, and diplomatic handling of this issue. (Ibid., RG 59, S/S Files: Lot 83 D 305, National Security Decision Memoranda, NSDM 17) Kissinger presented these proposals to Nixon on June 23. Nixon wrote “ok” beside each proposal but rejected one of the Richardson/Kissinger recommendations by writing “no” in the margin: “We could remove the restrictions precluding U.S. firms from supplying petroleum to ships owned or chartered by Communist China or any ship destined for China.” This recommendation commented that this “restriction hurts our oil companies through loss of trade far more than it bothers the Chinese.” (Memorandum from Kissinger to Nixon, June 23; ibid., Nixon Presidential Materials, NSC Files, Box 957, Haig Chronological File, HaigChron–June 1969) It was not included in NSDM 17. Kissinger then divided suggestion 4 of his June 23 memorandum into items (3) and (4) of NSDM 17.
  5. On June 28 Eliot informed the Under Secretaries of Commerce and Treasury that Green would chair the inter-agency group charged with preparing materials for the Under Secretaries Committee meetings dealing with NSDM 17. (Ibid., RG 59, S/S Files: Lot 83 D 305, National Security Decision Memoranda, NSDM 17) Specific procedures for implementing NSDM 17, as well as information on the PRC’s reaction, are ibid., National Archives, RG 59, Central Files 1967–69, FT 1 CHICOMUS.