109. Telegram From the Department of State to the Embassy in Hungary1

138447. Subject: Bilateral negotiations: Trade Topics. Ref: Budapest 1083.2

Department agrees that we should explore with Hungarians what can be done to expand trade and economic relations even in absence MFN and has reviewed Embassy list of recommendations with this in mind. While prospects for significant trade growth are necessarily modest, we do feel we can make sufficiently positive responses to convince Hungarians of our serious intent to reduce obstacles to trade.
We wish to be careful, however, not to give Hungarians unduly optimistic impression of what can be achieved. While we may point out possible steps to expand trade, ultimate decisions and responsibility for results rest with them. We should not be in position of suggesting costly sales promotions, such as participation in US trade fairs, when we cannot judge whether they would be worthwhile in terms of current trade potential. These are business decisions which ought to be made by Hungarians in light of careful market research and planning.
Following is a recapitulation of status of various suggestions in reftel. [Page 269]
Bilateral tariff negotiations: as stated State 133913,3 this would be in conflict with US trade policy and require new legislative authority.
Credit limitations: Re Ex-Im Bank credit policy, as noted in State 133913 Fino Amendment precludes Ex-Im credits or guarantees as long as Hungary is supplying war material or peaceful goods to North Vietnam. Re application of Johnson Act to commercial credit, Attorney Generalʼs letter to Secretary of May 9, 1967 (enclosure to CA–4257, December 15, 1967)4 gives guidelines. Embassy may wish to give copy of letter to GOH officials.
Claims settlement: Status outlined State 132858.5
Export control and Group W status for Hungary: Will be subject of separate message.
Partner for Hungarian Chamber of Commerce: Many national Chambers of Commerce, some with offices in US, are affiliated with US Chamber. However no Eastern European Chamber is now affiliated and probably could not qualify since US Chamber accepts only national Chambers which have no government subsidy or connection. Dept also checking possibility affiliation with NY Commerce and Industry Assn and will advise. However subject best pursued by Hungarian Embassy officials here. Dept will be glad to steer Embassy officials to knowledgeable sources such as German-American Chamber of Commerce in NY which we told carries on model trade promotion program.
Trade Missions: Commerce considers that, pending a change in US trade policy, another official Dept of Commerce trade mission would not now be justified in terms of amount of serious business it could undertake. Will however continue to encourage IOGA missions like Michigan State mission scheduled to visit Budapest in October.
Visit by Hungarian trade officials: We would be happy to facilitate visit by Veress and Lengyel who will in any event be in Canada. However we have no particular agenda in mind and would prefer to have visitors suggest topics in advance. It should be understood that on tariff and credit questions, we can do little more than reiterate positions already well-known to them. Whether visit would be worthwhile for Hungarians can probably be better assessed a little later. Meanwhile more aggressive activity by Hungarian Embassy trade officers would be desirable as providing possible basis for visit.
US trade fairs: These of course are privately organized and Commerce does not normally issue invitations. Since US fairs are listed semi-annually in International Commerce, Embassy can undertake to draw fairs to attention of GOH trade officials and provide information on how to participate.
Industrial cooperation and air agreement: Embassy has received preliminary US views and further guidance will be sent as talks progress.
  1. Source: National Archives, RG 59, Central Files 1967–69, POL HUNG–US. Confidential. Drafted by J.R. Tartter (EUR/EE); cleared by McDonnell (E/CBA), Duncan (E/OMA), and Lisle (EE); cleared in substance by Lewis (Commerce); and approved by Swank.
  2. Dated August 6; it reported the statement of goals of the Hungarian Foreign Trade Ministry presented to a U.S. representative on August 5. (Ibid.)
  3. Dated August 11; it outlined trade policy and the availability of credits for Hungary. (Ibid., FT 7 HUNG–US)
  4. The enclosure discussed the impact of the Johnson Act on trade with Soviet Bloc states. (Ibid., FN 6–11)
  5. Dated August 3; it commented upon the status of claims against Hungary. (Ibid., PS 8–4 US–HUNG)