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218. Memorandum for the Record1

SUBJECT

  • SRG Meeting on NSSM 148 (US/PRC Exchanges) and NSSM 149/CIEPSM2 (US/PRC Trade)

PRESENT

  • Dr. Kissinger, NSC
  • Mr. Holdridge, NSC
  • Mr. Rush, OSD
  • Mr. Nutter, OSD
  • Mr. Doolin, OSD
  • Admiral Moorer, JCS
  • Ambassador Brown, State
  • Mr. Richardson, State (Cultural Affairs)
  • Mr. Hinton, CIEP
  • Mr. Helms, DCI
  • Mr. McGinnis, Treasury
  • Mr. Lynn, Commerce

Dr. Kissinger opened by saying that the major thing he wanted out of this meeting is a strategy—i.e., what do we want to do and, via the negotiations in Paris, how do we get there from here? He noted that the Chinese liked nothing less than a series of ad hoc choices and [Page 871]offerings, and said we need some sense of priorities so that we can proceed. After telling Mr. Hinton that he wanted the CIEP involved in a systematic way, he asked Ambassador Brown to explain our priorities concerning the trade issue. Ambassador Brown said that if the paper2 met with the approval of the group, an action program of the most important items would be developed to be presented to the PRC. He also said that we should get something moving on the claims question, as well as establish a point of contact acceptable to the PRC that can be used by US businessmen. Mr. Hinton said we should not expect much by way of trade except at the ends of the spectrum where Japanese competition is weak (e.g., grain and civil aircraft), or possibly something in the middle such as fertilizer. Hinton expressed some doubt on the question of funnelling all US businessmen through one point of contact. He added that there is little chance for either MFN or EXIM in the near term, and that, in short, we should not move too fast too soon. Kissinger seemed to agree, noting that we do not want the big thrust submerged in a wave of uncoordinated trade applications. Mr. Lynn asked a series of questions: Where do we stand now? Should we create the image that we are all that eager to press ahead on the trade front? What is the trade potential, given PRC non-use of long-term credits? Lynn felt that we should not get US business convinced that there is a great market where none exists, at least over the next 3–5 years. (Mr. Helms said the CIA estimate was an annual market of $300 million maximum.) Kissinger said that the question of contacts could be handled in one of three ways: (1) All contacts should be made at the Department of State for referral to Paris, (2) Another “umbrella” organization could be established which would refer requests to the PRC, or (3) A point of contact could be established in the PRC. Mr. Rush then focussed the discussion by noting that the entire subject is dominated by political considerations and that it was vital that allies such as Japan and Taiwan not be alienated. He cautioned that we should keep the bud growing but not overdo it. With regard to contacts, Mr. Rush argued that a close watch should be kept either through an umbrella organization or by the Department of State. Mr. Helms said he found Mr. Rush’s logic to be unassailable, adding that if we go too fast we will end up in a terrible mess. Ambassador Brown agreed. Kissinger said he felt that the PRC would likely take our guidelines in this regard and that if we give none, the Chinese will likely feel their way toward a congenial umbrella group. Mr. Rush said that there are two ways we can handle this. One way would be to tell the PRC through Ambassador Watson that we don’t want a flood of visas issued. The second would be to tell the business community, through [Page 872]the Department of State, that there isn’t a great potential for trade with the PRC. Kissinger then told Brown that the paper has to be put in action program format, as we must tell the Chinese soon how we visualize things or the Paris meetings will peter out—or the Chinese will devise their own contacts. Brown argued that the claims question negotiations should be separate; Kissinger agreed, but said that those negotiations should commence only after there is some glimmering of movement regarding the trade question. Hinton then raised a potential textile problem to which Kissinger replied that he thought the PRC would handle this unilaterally and with restraint. Brown closed the discussion of NSSM 149 by saying that an action program would be prepared within a week.3

Turning to NSSM 148,4 Mr. Richardson said that we are starting a learning process in which we are trying to show the PRC that exchanges through responsible structures are in their interest as much as in ours. Kissinger said that we should tell the PRC which groups are the responsible ones, and John Holdridge replied that this was done in February in Peking by the State contingent. Kissinger said that, in any event, Ambassador Watson should be provided a list to present to the Chinese as our recommendation, adding that he did not think the PRC would challenge our list. Richardson said the list would be drawn up but we would need more consultations with the private sector. A question was raised as to whether the exchanges would be on the basis of equality. Kissinger said there would be no fingerprinting of citizens of the PRC and seemed to indicate that equality would be the rule, but the meeting tailed off at this point, and Dr. Kissinger’s reaction was not totally clear.

Dennis J. Doolin
Deputy Assistant Secretary
  1. Source: Washington National Records Center, RG 330, OSD Files: FRC 330 77 0094, China (Reds), 1972. Secret; Eyes Only. Drafted by Doolin on April 7 and approved by Nutter. Copies were sent to Laird, Rush, and Nutter. A notation on the memorandum indicates that Laird saw it. The meeting was held in the White House Situation Room. The time and place of the meeting are taken from a more extensive record in National Archives, Nixon Presidential Materials, NSC Files, Kissinger Office Files, Box 93, Country Files, Far East, China Trade/Exchanges, February 2, 1972–July 4, 1973, 2 of 2.
  2. Reference is to the response to NSSM 149, summarized in Document 217.
  3. See footnote 9, Document 229.
  4. Document 209.