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229. Memorandum From Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Possible Next Steps in Sino-US Relations

Following is an analysis of possible next steps in Sino-American relations. It has been worked out in close coordination with a Department of State paper.2 As the State analysis is somewhat less inclusive than this version, but with an otherwise substantial degree of overlap, we will cable only this version to avoid redundancy.3

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I—Where We Stand—PRC Actions since the Peking Summit

Since the signing of the February 28 Shanghai Communiqué, there have been a number of solid indications that the Chinese are living up to the spirit of that document and wish to sustain the momentum of our developing relationship.

In the field of official exchanges, the Chinese again proved to be superb hosts during the April 18–May 3 visit of Senators Mansfield and Scott, despite the increasing tension in Indochina at that time. In addition, plans are moving ahead smoothly for the June 26–July 5 visit of Congressmen Boggs and Ford.

Little progress has been made in establishing a formal framework for other exchanges, but Ambassador Watson has met three times with PRC Ambassador Huang Chen and, in Huang’s extended absence, once with the PRC Chargé. Working-level contact has also been established between the two Paris embassies on a routine basis. At a nongovernmental level, a PRC table tennis team made a successful tour of the United States in April—which included a meeting with the President—and a group of Chinese physicians will probably visit the US in late June or July under the auspices of the National Institute of Health and the AMA. The PRC also recently played host to Dr. Wang Chi of the Library of Congress, to Professor John K. Fairbank of Harvard, and to a group from the Federation of American Scientists.

Consistent with its pledge to facilitate trade, Peking invited 40 American businessmen to the Canton Fair in April/May for the first time and accorded them preferential treatment. Contracts were concluded for about $5 million worth of Chinese exports. Although no US export contracts were concluded at the Fair itself, Peking has reportedly made a firm offer to buy several Boeing 707 aircraft, is negotiating other purchases from Lockheed, and has asked Hughes Aircraft Corporation to submit a proposal for a domestic communications satellite system.4 RCA [Page 906]has also been asked to upgrade its temporary earth satellite station at Shanghai to permanent status and to construct an additional satellite station in Peking.5

It should be emphasized that these developments have occurred in a political context—particularly the situation in Vietnam—which under other circumstances might have been expected to elicit a hostile response from the PRC. The nature of Peking’s behavior seems to be a firm indication of a genuine desire to further improve its relationship with the United States. Consistent with its general approach to Indochina since shortly before the President’s China trip, Peking has muted its comments on the US mining of the DRV coast and its pledges of support to Hanoi.6 Peking also has dragged its feet in responding to Soviet and East European efforts to reroute cargoes through China. These responses may stem in part from PRC displeasure with the North Vietnamese offensive which triggered the US response. Refusal to cooperate with the Soviets also has other obvious motivations.

More importantly from our perspective, however, the Chinese low- key approach appears to be the product of a PRC assessment that the President seriously intends to disengage from Vietnam and Peking’s desire not to take any action which would pose a challenge to that plan. Even in an area of extreme sensitivity in our bilateral relations—the US military presence in Taiwan—Peking has remained silent over the recent deployment of two squadrons of C–130 aircraft to CCK airbase. PRC propagandists also have foregone any derisive comment on the Moscow summit meeting, in sharp contrast to Soviet behavior during the Peking summit.

II—Possible Further Areas for Initiative

Peking’s behavior suggests that the Chinese leadership may be responsive to further US initiatives in the areas of political contact, cultural exchange, and trade. Following are a series of concrete steps that might be taken in each of these general areas.

A.
Political. It is assumed that developments in Vietnam and in US-Soviet relations following the Moscow summit are of intense concern [Page 907]to the Chinese leadership (even—or particularly—if they appear indifferent or noncommittal). Beyond these issues, however, are a number of political areas relevant to progress in Sino-American relations:
1)
Korea and the UN . While Chinese Foreign Ministry officials have expressed the view that debate on the Korean issue is unavoidable at the coming 27th UNGA, we might seek a coordinated position with Peking (and Moscow) to avoid an acrimonious public debate which would likely polarize positions just at a time when, in the light of the growing yet fragile contacts between Seoul and Pyongyang, deferment of a GA debate would be of greatest interest to the major parties concerned.
2)
A Chou En-lai Appearance at the 27th UNGA, and Meeting with President Nixon . The Chinese may be interested in emphasizing their re-entrance onto the world political stage through a Chou En-lai appearance at the UNGA session this fall. If progress in such areas as Vietnam and Korea permits, a Chou visit to New York in the fall might be coordinated with a meeting with President Nixon which would enable him to reciprocate the hospitality of the Chinese leader and to provide an opportunity for further talks.
3)
US Prisoners in China. During his discussions with Senators Scott and Mansfield, Chou En-lai cryptically noted that the case of John Downey was being given “added consideration”. Downey’s release in the late summer or fall would obviously be timely.7
4)
Narcotics Control. We might comment to the Chinese on our gratification at the remarks of their delegate regarding the drug problem at the May 16th session of ECOSOC, and indicate our interest in working with them to solve this major world problem.8
5)
Ocean Laws. We might indicate to the Chinese our satisfaction that their most recent protest over possible intrusion by US craft into areas they claim in the Paracel Islands was conveyed privately. We [Page 908]could indicate US efforts to prevent reoccurrences, but explain that we are uncertain of the rules under which the PRC delimits its territorial waters. We could then suggest that experts from both our countries convene to discuss delineation of boundaries as well as to review the range of issues likely to come up at the 1973 UN Conference of the Law of the Seas.
B.
Economic. We have received a number of CAS and State reports which indicate that PRC officials are concerned about several legal and financial barriers to the development of trade with the US, and that they would like to purchase a range of American products (particularly those embodying advanced technology). Thus we might take a number of concrete steps to facilitate the expansion of trade.
1)
Propose the establishment of a Joint USPRC Trade Commission (perhaps based in Peking). Such a Commission would be devoted to the resolution of bilateral trade problems and the promotion of Sino–American trade in the spirit of the Shanghai Communiqué. This would follow the precedent of the binational trade commissions recently established with the USSR and Poland. As well, such a Commission—if based in Peking—would provide continuous US representation in the Chinese capital. While unilateral “official” US representation almost certainly remains unacceptable to Peking, the time may be ripe for detailed exploration of alternative forms of representation which would enable us to deal with impediments to Sino–American trade such as private claims against the PRC and the related frozen assets problem, the issue of MFN status and tariff barriers, and additional regulatory constraints.
1–a)
Propose that a Joint Congressional Commercial Delegation Visit the PRC . If a formal PRCUS Trade Commission is unacceptable to the Chinese, we could suggest the visit to the PRC of a more informal, but authoritative Congressional group to discuss matters of mutual interest. It might be noted that Chou En-lai proposed to Senators Scott and Mansfield that the Senate Commerce Committee organize a delegation to come to the PRC for wide-ranging discussions. Senator Magnuson is in the process of following up on Chou’s lead. As well, Congressman Boggs plans to discuss commercial matters with the Chinese in late June. We suspect that PRC officials may not fully appreciate the Congressional and bureaucratic lay of the land involved in dealing with such problems as MFN and blocked assets. As matters now stand they are being exposed to US commerce in bits and pieces. Hence it would seem to be in our mutual interest to propose a unified and authoritative forum for discussing these issues.
2)

Private US Claims Against the PRC. Seek an explicit agreement in principle to negotiate a settlement of the claims issue, either through a Joint Commission as proposed above, via talks at Paris, or in the context of a visit of a senior U.S. representative to Peking.

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As emphasized in U/SM–91, NSSM–149, and the follow-up memorandum to NSSM–149,9 a claims settlement is a first-priority issue in the development of Sino-American trade. A settlement is essential to forestall disruption of USPRC trade by lawsuits and attachments of PRC commercial property by private US claimants. During informal conversation with Secretary Rogers in Peking on February 23, Foreign Minister Chi indicated that the claims question was one which could be discussed between the US and PRC.

3)

Air and Ship Travel. Seek an explicit agreement in principle to discuss reciprocal shipping and air service between the US and the PRC, either through the Joint Commission proposed above or at Paris.

This issue should be approached in accordance with the recommendations of NSSM–149 and its follow-up memorandum.

4)
Trade Exhibitions. Seek an agreement to exchange trade exhibitions during the fall, or at least to have an American trade exhibition in China, perhaps in Shanghai before the fall Canton Trade Fair.
C.
Exchanges. The successful tour of the US by the PRC ping pong team, and an imminent visit to this country of a group of Chinese doctors, indicates that the PRC intends to facilitate exchanges in a sustained and orderly manner. NSSM–148 and its follow-up memorandum suggest initiating discussions at Paris to regularize procedures for promoting exchanges.10 Sino–American contact at the senior level can be used to advance the progress of discussions at Paris.
1)

Propose “Regularization” of Procedures for Managing Exchanges. Express to the PRC our pleasure at the progress made to date in the development of exchange programs. Indicate that we think it would be helpful to both sides to regularize procedures for selecting and managing exchange programs. On the assumption that they wish to continue the quasi-people-to-people approach utilized thus far, indicate that there are two private groups which the USG feels are worthy of confidence in managing exchanges: Scientific and scholarly programs would be facilitated by the Joint Committee on Scholarly Communication with the PRC, a group that links the National Academy of Science, the Social Science Research Council, and the American Council of Learned Societies. Cultural programs would be facilitated by the National Committee on US-China Relations.

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Indicate that we understand the PRC has had experience in dealing with both groups in connection with the ping pong and doctors’ visits, and suggest that our embassies at Paris proceed to work out the details for processing exchange proposals on the assumption that the above two groups will be facilitating organizations on our side, with the Department of State providing authoritative communication and security where necessary.

2)
Propose Specific Exchange Programs. If PRC authorities are reluctant to regularize a procedure for managing exchanges, propose a set of specific programs in such areas as education (exchanges of advanced students), scientific research (agronomy, medicine, etc.), sports (basketball, gymnastics), or the arts (Peking opera, dance groups, etc.)
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1317. Harold Saunders Files, Richard Solomon Chron Files, 1972. Top Secret; Sensitive; Exclusively Eyes Only. Sent through Haig.
  2. A June 9 memorandum from Rogers to Nixon is attached but not printed. Included with Rogers’ memorandum are two attachments: Joint USPRC Trade Commission and U.S. Representation in Peking, and Air Travel.
  3. This memorandum was apparently sent as a telegram to Kissinger, who was in Japan June 8–12.
  4. In a May 19 memorandum to Flanigan and Kissinger, Harold B. Scott, Assistant Secretary of Commerce for Domestic and International Business, noted that Boeing sought “approval and appropriate guidance for further negotiations with the PRC.” He added that a committee of representatives from Defense, State, Commerce, and NASA agreed that Boeing should negotiate with the PRC “subject to obtaining an export license and prior CoCom clearance and provided that Boeing can satisfy the U.S. Government and (a) The end-use of the aircraft is for regularly-scheduled civilian service; and (b) The only equipment requested would be normal for such regularly-scheduled civilian service.” On May 23 Hormats and Holdridge summarized Scott’s memorandum for Haig and suggested that the NSC approve Boeing’s negotiations. A May 26 note from Jim Hackett of the NSC staff to Jon Howe reads in part: “Commerce needs a decision urgently (the Boeing negotiators are now in Peking).” A handwritten notation reads: “Heavy pressure on this.” A May 29 memorandum to Secretary of Commerce Peter Peterson, signed by Haig for Kissinger, noted that Flanigan and Kissinger approved the negotiations, subject to the two requirements mentioned in Scott’s memorandum. (All in National Archives, Nixon Presidential Materials, NSC Files, Box 525, Country Files, Far East, PRC, Vol. IV)
  5. This equipment had been installed for Nixon’s visit. In a March 8 memorandum to Kissinger, Laird recommended approval of the earth station in Shanghai but denial of a license to sell 18 additional “videovoice” terminals. In a March 14 memorandum to Laird, Rogers, and Peterson, Kissinger approved the sale of the equipment already in the PRC and deferred a decision on the other equipment, stating that “these should be considered within the USG anew on their own merits.” He concluded: “we should reject any effort to interpret the U.S. sale of the RCA satellite earth station and related equipment to the PRC as a basic change in the U.S. policy on the embargo of strategic communications generally.” (Both ibid., Box 1349, NSC Files, 2 of 2, 1971)
  6. See Document 226 and footnote 5, Document 227.
  7. See Document 223.
  8. In a June 16 memorandum to Kissinger, Eliot noted that Nelson Gross, Senior Adviser to the Secretary and Coordinator for International Narcotics Matters, had been advised by Holdridge “that it might now be appropriate to raise several topics concerning international narcotics with the People’s Republic of China. (Egil Krogh, Executive Director of the Cabinet Committee on International Narcotics Matters, agrees.)” According to the memorandum, Gross felt that two important issues were PRC assistance in interdicting narcotics traffic around Hong Kong and efforts to control opium production and traffic in Burma. He suggested discussing these issues through the UN and pointed out two specific actions that could be taken. First was to encourage “PRC accession to the Single Convention and to the Amending Protocol opened for signature on March 25.” Second was to encourage PRC membership in the UN Commission on Narcotic Drugs. (National Archives, Nixon Presidential Materials, NSC Files, Box 529, Country Files, Far East, Homer, USPRC Negotiations, Paris)
  9. The follow-up memorandum was requested by Kissinger at the March 31 Senior Review Group meeting. See Document 218. Regarding the April 24 paper, see footnote 2, Document 228.
  10. On April 24 Eliot sent the follow-up memorandum to NSSM 148 to Kissinger. (National Archives, Nixon Presidential Materials, NSC Files, Box 529, Country Files, Far East, Homer, USPRC Negotiations, Paris)