Foreign Relations of the United States, 1969-1976, Volume XIX, Part 2, Japan, 1969-1972

94. National Security Decision Memorandum 130¹

Washington, September 7, 1971.

TO

• The Secretary of State

SUBJECT

• U.S.-Japan Joint Economic Committee Meeting

The President has reviewed your memorandum of September 1, 1971 on this subject, as well as the CIEP paper of August 24, 1971.²

The President has directed that in the ECONCOM meetings,³ the U.S. Delegation be guided by the following principal points:

1. Throughout the meetings, as proposed by the Secretary of State, we should endeavor to re-establish in the minds of the Japanese the significance and closeness of the U.S.-Japanese relationship through a series of forthcoming political and psychological measures. We should:

—Assure the Japanese that shortly after the ECONCOM meeting the President will send the Agreement for Reversion of Okinawa to the Senate with a strong recommendation for its early ratification.

—Reaffirm our offer to explore with Japan and other countries the possibility of selling them U.S. technology for use in gaseous diffusion plants in third countries for enrichment of uranium.

—Indicate our desire for closer scientific collaboration in seeking solutions to common problems in the fields of transportation and ecology.⁴

—Indicate our desire to cooperate to seek liberalization of the trade policies of the European Community.

—Indicate our desire to work within the OECD High Level Group to prepare the way for a major multilateral attack on trade barriers.

—Indicate our desire to develop international procedures for adjudicating investment disputes in developing countries.

2. The U.S. new economic policy, with special emphasis on our balance of payments goals, should be clearly explained to the Japanese delegation. We should state strongly that it is our conviction that a reasonably balanced trade account between our two countries is necessary, and feasible by the end of 1973. It should be pointed out that, as we understand Japanese balance of payments and trade projections, they are incompatible with our objectives. It should be proposed that we work together to achieve mutually agreed compatible balance of payments goals.

3. The overriding U.S. objective is to obtain a revaluation of the currencies of our major trading partners, which will include a substantial revaluation of the yen. While negotiations on the exact amount of yen revaluation sought should be carried out multilaterally, Secretary Connally is authorized privately, if he wishes, to inform the Japanese Ministers that a revaluation in the range of 15 to 20 percent is necessary.

4. We should indicate that we would remove the 10 percent surcharge only when our external position is assured.

5. Beyond this, we wish to achieve our balance of payments goals primarily through trade liberalization, and we expect the Japanese to remove quotas and other import restrictions illegal under the GATT. We are particularly interested in prompt removal of quotas on agricultural items, computers, aircraft, and integrated circuits.

6. We should welcome the Japanese eight-point program, commend their efforts so far, and urge them to go further.

7. It should be made clear to the Japanese that we still seek a negotiated voluntary restraint agreement for textiles but will be prepared to solve the problem in other ways if an agreement is not forthcoming. Our continuing need for a voluntary restraint agreement for steel exports should also be made clear.

8. We should stress our desire for even closer economic cooperation in the future. To this end, we should propose periodic meetings with the Japanese, starting with a special interagency mission to Japan by next January to assess with the Japanese specific progress toward agreed upon balance of payments goals, compatible economic policies and the eight-point program, to identify remaining or emerging trade problems, and to work out constructive, timely solutions to common economic problems.

9. In discussing lower priority economic objectives, including increased Japanese defense procurement in the United States, increased aid on softer terms, and investment liberalization, our delegates should make clear our wishes in low key, relating such secondary points to our overall balance of payments goals.

Henry A. Kissinger⁵

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 364, Subject Files, National Security Decision Memoranda, Nos. 97–144. Secret. On September 5, Kissinger and Peterson sent this memorandum to Nixon who initialed his approval. (Ibid., NSC Institutional Files (H-Files), Box H–227, National Security Decision Memoranda, NSDM 130) on September 6, Hormats sent a memorandum to Kissinger, recommending that he send the draft of NSDM 130 to the President. Hormats stated: “On balance I believe this scenario deals fairly with State, Treasury, and CIEP’s positions, it minimizes the possibilities of creating political friction with Japan over economic issues, but makes a strong case for measures which we believe highest priority—i.e., yen revaluation and trade liberalization. And we would not give the Japanese so much in the technology field that it would jeopardize the China trip.” (Ibid., Box H–059, Senior Review Group Meetings, SRG Meeting—Japan 9/7/71) Copied to 16 relevant officials including the Secretaries of the Treasury, Defense, Agriculture, Commerce, Labor, Interior, and Transportation.
2. Document 92 and see footnote 4 to Document 93.
3. “ECONCOM 8,” the eighth U.S.-Japan Joint Economic Committee Meeting at the cabinet level, was scheduled for September 9–10, 1971, in Washington.
4. In an earlier undated draft of this NSDM the next point read, “Indicate willingness to support election of a Japanese Chairman of the GATT this November.” This proposal was dropped in the final version. (National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–227, National Security Decision Memoranda, NSDM 130)
5. In his September 6 memorandum to Kissinger, Hormats indicated that Peterson wanted to co-sign this NSDM since it dealt with international economic affairs. Hormats noted, however, that “having two Assistants to the President sign the memorandum might look awkward to the agencies, and the memorandum was developed in response to NSC directives.” Haig, acting on behalf of Kissinger, disapproved Peterson’s request. (Memorandum from Hormats to Kissinger, September 5; ibid.)