163. Memorandum From the President’s Assistant for International Economic Affairs (Flanigan) to President Nixon 1

SUBJECT

  • Wilbur Mills and the Trade Bill

During a 1½ hour meeting with Chairman Mills in his office on Thursday, March 15, we discussed (among endless non-related topics) the timing of Ways and Means consideration of the Trade Bill, and the extension of MFN to the USSR.

Regarding timing, Mills said that he had originally agreed to set aside tax hearings for trade legislation of an emergency nature, such as the right to impose a surcharge on imports from a single country. I pointed out that our trade negotiations were a major part, but only a [Page 624]part, of a broad negotiating effort with our allies on both economic and non-economic matters. The former includes negotiations for monetary reform and discussions on investment rules as well as the trade negotiations. It was essential that all parts of these discussions move forward together and that the United States not be accused of "dragging its feet" in any single area, particularly so important an area as trade. Given the EC’s public commitment to have a trade negotiating position by June, and general agreement to begin trade negotiations in September, long delay in consideration of the Administration’s Trade Bill would be a matter of considerable concern.

I did indicate, however, some difficulty in declaring the Trade Bill to be "emergency legislation." Mills said all he was looking for was a statement by you that there was some "urgency" to Congressional consideration of the Trade Bill. If your message contained a sense of immediacy, Mills would respond by interrupting the tax hearings at the time of the Congressional recess on April 19. He would further commit to begin hearings on trade immediately on the Committee’s return on Monday, April 30 and continue with the hearings and Executive Committee sessions, with the expectation that the Bill would come to the floor in the first half of July. In order to do this, Mills asks that the trade message be sent to the Hill either during the week beginning Monday, April 2 or early in the week beginning Monday, April 9.

In considering this timing, Mills indicated some regret that his first test of the new Rules Committee system, which denies him the closed rule,2 would come in connection with the Trade Bill rather than the Tax Bill. He pointed out that the closed rule had been instituted as a reform and that he "needed to teach these new reformers the difference between good reform and bad reform." His preference for using the Tax Bill for this purpose is that he "considers trade more important." Presumably, he believes the new system could result in so bad a Bill that you would veto it and he could then convince the Congress to revert to the closed rule for Ways and Means bills. Since the prospect of vetoing a Trade Bill is highly unattractive, one could make an argument for delaying trade until after taxes. However, it is hard to believe that the Trade Bill would get a closed rule even if the Tax Bill provided a lurid example of the shortcomings of an open rule.

On MFN, Mills said he had had a long talk with Alkhimov3 (USSR Deputy Minister of Trade) who had undertaken to get a relaxation of [Page 625]the exit visa practices upon his return to Moscow. I pointed out that this problem was considerably larger than Alkhimov and that it might take quite some time to arrive at a satisfactory solution. Therefore, I urged that Mills accept the Javits proposal allowing you the right to grant MFN to countries behind the Iron Curtain, subject to Congressional veto. I pointed out that this could remove MFN for the USSR from the Trade Bill discussions, protect the détente to the extent of giving you the opportunity of taking action on your commitment to Brezhnev,4 and provide more time in which to work out a negotiation with the Soviets.

Mills said he did not find this solution acceptable. He based his opposition entirely on the belief that a Congressional veto violated the Constitutional right of the Executive to act. I pointed out a similar veto existed with regard to reorganization plans and that he had agreed to our proposal to a similar veto regarding negotiations on non-tariff barriers. Nevertheless, he continued to express opposition to the Javits proposal. (Jackson and Ribicoff had expressed similar opposition though most members of the Congress with whom it has been discussed find it an acceptable compromise.) I agreed with Mills that further discussions of this provision of the Trade Bill should await Shultz’ return and a review of his discussions in Moscow.5

Mills will be on Meet The Press on Sunday, March 18 and will be quizzed by Eileen Shanahan on his schedule for trade hearings. In a phone conversation with me today he agreed to state his intention of setting aside tax hearings if so requested by the President. I recommend that prior to his television appearance you call him and thank him for his willingness to take up trade hearings immediately after the Easter recess and to continue them to completion. This will assure his sticking to this commitment. If you are successful in getting his agreement to the timing for the Trade Bill outlined above, we will schedule the submission of the Message and the legislation to Congress on Tuesday, April 10, as you are expected to be in San Clemente during the previous week.

In your conversation you might wish to commiserate with him about his bad back. Though he returned to Washington at the beginning of the week, he was out two days and it is clear his back is still [Page 626]hurting. However, he looks a great deal better than he did during my recent visit with him in Arkansas.6

Timmons and Cook concur in my recommendation that you call Mills and confirm his agreement to begin hearings on the Trade Bill on April 30.

  1. Source: National Archives, RG 56, Records of Secretary of the Treasury George P. Shultz, 1971–1974, Entry 166, Box 6, GPS Trade—Volumes I & II 1973/74. No classification marking. A handwritten notation at the top of the memorandum reads: "Be sure Simon & Shultz see this—" Attached to a March 19 note from White House staff member Tod Hullin to Shultz that reads: "John Ehrlichman asked that the attached be brought to your attention."
  2. Before 1973, the House Ways and Means Committee often sent legislation to the floor of the House of Representatives under the closed rule, which prevented the addition of amendments to a bill by the majority party; in 1973, procedural changes were introduced that made it easier for majority party House members to add amendments to bills coming out of the Ways and Means Committee.
  3. Vladimir S. Alkhimov.
  4. The President made this commitment during the U.S.-Soviet summit meeting in May 1972. See Foreign Relations, 1969–1976, volume XIV, Soviet Union, October 1971–May 1972, Document 265.
  5. Shultz was in Moscow from March 11 to 14; reports on his talks are in the National Archives, Nixon Presidential Materials, NSC Files, Box 953, VIP Visits, George P. Shultz (Europe & USSR), March 8–22 1973 [& September–October] and ibid., Box 424, Backchannel Files, Backchannel Messages—Europe—1973.
  6. See Document 161.