Foreign Relations of the United States, 1969–1976, Volume XXIX, Eastern Europe; Eastern Mediterranean, 1969–1972

202. Memorandum From the Acting Chairman of the National Security Council Under Secretaries Committee (Samuels) to President Nixon¹

Washington, December 15, 1970.

SUBJECT

• U.S. Economic Relations with Romania

The Under Secretaries Committee has reexamined U.S. economic relations with Romania and has made recommendations on actions to give Romania treatment more closely comparable to that which we give to Yugoslavia. Since the issues involved are primarily economic, the Chairman has asked that I chair the committee on this matter.

In preparing these recommendations, we have been guided by the intention, expressed in your report to the Congress of February 18, 1970,² to “pursue … with vigor” those “cooperative programs in the economic, technical, scientific and cultural fields” set in motion during your visit to Romania last year and re-emphasized during your conversations with President Ceausescu when he visited Washington this year.

Romaniaʼs overriding concern is the preservation and enhancement of its relative independence from the Soviet Union, and to achieve this objective Romania has put great stress on trade and other economic relations with the West. Within legislative limitations we have taken several steps during the past year to improve and expand U.S.-Romanian economic relations, including liberalization of export control procedures, extension of CCC agricultural credits, encouragement of private bank export financing and promotion of joint ventures.

However, these initial steps have been modest in terms of actual impact on trade flow. The two overriding issues for expanding trade between our countries and providing Romania treatment roughly comparable to that of Yugoslavia are most-favored-nation (MFN) tariff treatment and access to Export-Import Bank credits.

With regard to MFN tariff treatment, the Under Secretaries Committee recommends that it would be better to request general discretionary authority to negotiate MFN status with any Communist country with which we have diplomatic or trade relations rather than to seek legislation restricted to Romania alone. This broad approach is deemed desirable even though the recommendation is made in the context of initiatives for Romania alone. The more general question of MFN as it affects other Communist countries involves additional issues that have not been addressed by the Committee but which will have to be considered before seeking Congressional authorization. In addition, in the case of Romania alone, Defense, Joint Chiefs of Staff and Interior recommend that, in order to convince Congress that a request for legislation on MFN should be granted, a more detailed plan should be developed in the form of potential negotiating packages that link our, and Romaniaʼs interests and objectives, with practical moves on both sides.

Export-Import Bank credits are now unavailable to Romania because of the Fino Amendment which prohibits such credits to countries giving governmental assistance to North Viet-Nam. State, Treasury, Commerce, Agriculture, Labor, The Special Trade Representative, AID, Eximbank and USIA recommend the outright repeal of the Fino Amendment. If this does not prove feasible, amendment to provide Presidential discretionary powers should be considered. These agencies make this recommendation of a broad approach to the Fino Amendment, as in the case of MFN, only in the context of initiatives relating to Romania alone. Defense, Joint Chiefs of Staff and Interior oppose repeal or amendment of the Fino provision and instead favor informing the Romanians that if they stop giving governmental assistance to North Viet-Nam, we would be prepared to offer Exim credits (in which case the Fino Amendment would be inapplicable).

Other recommendations agreed by the Committee but of secondary priority compared with MFN and Export-Import Bank credit, are that we:

• —seek legislation separating OPIC from the Foreign Assistance Act and without the restrictive provisions of the Act in order to carry out the Presidentʼs decision to eliminate OPIC restrictions on investment insurance and guaranties for projects in Romania.
• —continue to liberalize procedures for export control but not seek to change the export control category for Romania.
• —consider beneficiary status for Romania as a developing country for purposes of generalized tariff preferences after the negotiation of MFN status.
• —postpone relaxation of capital controls until it is more clearly dictated and desirable.
• —not seek at the present time eligibility for Romania for the untying of aid among developing countries.
• —support but not sponsor IMF and IBRD membership for Romania if we are assured that it is willing and able to meet the obligations of membership. Before we commit ourselves, we would want also to be assured that Romania has made reasonable progress in settling the defaulted dollar bond claims.
• —not consider Congressional authorization of a sugar quota for Romania.
• —resume negotiations with Romania for an air transport agreement when Romania indicates a willingness to negotiate seriously.
• —seek Romanian (and Yugoslav) eligibility for PL–480 Title I but not for U.S. foreign aid.
• —include in the State of the Union message and Foreign Policy Report references to your visits to Romania and Yugoslavia and President Ceausescuʼs visit here, signaling our special relations and our desire to expand further our economic relations with them. Other high officials should also stress this policy when appropriate in their written and oral statements.

Since Romanian accession to the GATT seems close to resolution, the Committee does not see a need to make further decisions on this matter at this time.

After decisions have been made on individual issues we will be in a better position to develop a comprehensive legislative strategy for all matters affecting Romania.

Attached is a detailed report of the Committee with a separate discussion of each of the recommendations listed above.³

NS

1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–270, Under Secretaries Study Memoranda, U/DM 1–19, U/DM 14A. Confidential. This NSC Under Secretaries Committee decision memorandum, NSC–U/DM 14A, was based on NSC Under Secretaries Committee Study Memorandum 87/D, November 27 (ibid.), requested by Kissinger on November 11 (see Document 201).
2. See Document 7.
3. Attached but not printed.