186. Memorandum From Helmut
Sonnenfeldt of the National Security Council Staff to the
President’s Assistant for National Security Affairs (Kissinger)1
Washington, September 17, 1973.
SUBJECT
- Title V (MFN) of the Trade Bill
The attached (Tab A) paper by Bill Pearce which you received separately over
the weekend lays out the issues and options. Since my brief memo (Tab B) of
September 14,2 there have
been these additional developments of which I am aware.
- 1.
- Competing pressures by the US business community (Kendall and others) and Jewish groups as
well as Soviet dissidents—Sakharov statement and
attack on Lazarus by Soviet Jews3—have
tended to pose the issues in terms of profits vs. humanity. Senator
Jackson is scheduled to speak on the Senate
floor today, with Sakharov’s well-timed plea for adoption of
Jackson–Vanik as the backdrop.
- 2.
- On the other hand, Richard Perle4 has contacted a Ways and Means
consultant to suggest (1) the possibility of some compromise, or (2)
adoption of Jackson–Vanik by Ways and Means and the House and the use of the
time before Senate action to work on a compromise. Perle and Tony
Solomon of the Ways and Means staff may be exploring these currently.
But just what is involved is quite unclear and the upshot may well be a
House Bill with Jackson–Vanik in it and no Administration leverage when Senate
consideration begins for a practicable [Page 688] compromise, unless there is a major break
meanwhile in Soviet conduct and/or Jewish leadership attitudes in this
country.
- 3.
- The ubiquitous Alkhimov is in town again. His
principal mission was to get an EX–IM loan for the Moscow trade center.
(I understand Kearns5 has turned this down.
Alkhimov had given him a 24 hour deadline.
Kearns and others apparently feel that with
mortgage money in the US at 10%, EX–IM and the Administration would be
extremely vulnerable were the Soviets given 6% money for what amounts to
mortgages on the hotels and other buildings of the Trade Center.
Alkhimov is seeing Shultz this afternoon.) The press already is reporting
on Alkhimov’s presence and his meeting with Don
Kendall. Overt lobbying for Title V by Alkhimov
could produce a bad backlash.
The idea of delaying any action on Title V until the very end of the third
reading has merit only if there is a major effort to build support for
Pettis–Corman (the only remotely viable alternative to
Jackson–Vanik). Failing that, delay will mean that Corman will be
further deterred from sticking with the compromise, support for
Jackson–Vanik
will be restored and about the only option left will be to drop Title V.
(This last course has much support within the Administration among those who
fear that the fight over Title V could ruin the whole trade bill by opening
it to crippling amendments on the House floor.)
The argument that a House Bill without Title V will permit House conferees to
operate flexibly to obtain a compromise on a Senate bill that includes
Jackson–Vanik
has been used by Mills and others. But
it is a very thin argument: the Senate might also drop Title V and then
there is no MFN at all (though credits would
be saved); or, more likely, the Senate might pass
Jackson–Vanik
so overwhelmingly that few in the House will be prepared to take the
political heat to which they would be subjected were they to try for a
weaker version in conference.
An Administration veto threat would produce major acrimony inside the
Administration and, if carried out, might well be overridden.
In sum, delay makes sense only if there is a
well-coordinated effort to get a solid Committee vote for Pettis–Corman
at the end of the delay. Otherwise, the other unpalatable options
are to get whatever vote is obtainable on Wednesday6 for Pettis–Corman or for dropping Title V with an explicit commitment
from Mills to take responsibility for
a strong position by House conferees later on.
[Page 689]
In the event of a decision to delay, there is little value in your going up
to Ways and Means on Tuesday.7 Whatever impact you
have will be dissipated by voting time unless you make a
further appearance later, or undertake a major direct effort with
individual Ways and Means members. But you may want to consider a later
appearance, closer to voting time.
If it is decided to go for a vote Wednesday, your appearance Tuesday is
essential, though its results would be unpredictable.
A package of material for a Tuesday appearance will be sent to you shortly,
so it is available.
Note: Since completing this memo I heard from Pearce on the Hill (10:00 a.m.) that
over the weekend enormous pressures were mounted against Pettis–Corman
and that it is now assumed that Jackson–Vanik has 300 votes on the floor. Corman
had a meeting with Jewish leaders on Friday,8
where he urged “responsibility” but ran into a stone wall.
Committee members feel that Pettis–Corman would fail in the Committee,
and that once Jackson–Vanik had passed, a vote to drop Title V would fail
also. Pearce thinks delay is
probably the only possible chance, unless your appearance Tuesday can
turn the situation. But he doubts that even that can be accomplished.
Pearce says that any effort to
delay must be decided on promptly today or it, too, will fail.
Pearce tends to be pessimistic and, I
think, generally would prefer for Title V to go away so the Bill will pass.
We need Timmons for an independent
judgment of the situation in Ways and Means.
[Page 690]
Tab A
Washington, September 16, 1973.
Memorandum From the Deputy Special Representative for Trade Negotiations
(Pearce) to the President’s
Assistant for National Security Affairs (Kissinger) and Secretary of the Treasury Shultz9
SUBJ
- Title V and the Jackson/Vanik Amendment
The House Ways and Means committee is scheduled to decide Wednesday
(September 19) whether it will accept the
Jackson/Vanik amendment, the Pettis/Corman amendment or drop
Title V from the trade bill. The attached paper reviews recent
developments and arguments for and against three alternative
Administration strategies.
The choice among them hinges on the likelihood of a successful effort to
swing the support of responsible Jewish leaders from
Jackson/Vanik to Pettis/Corman or some acceptable alternative.
If this can be achieved in three to four weeks, the best bet would seem
to be a combination of Option III (delay) and Option I (Pettis/Corman).
If several months will be required, serious consideration should be
given to Option II (drop Title V from the House bill), distasteful as
that may be. We must decide Monday (September 17).
Attachment
Washington, September 15, 1973.
Paper Prepared by the Deputy Special Representative
for Trade Negotiations (Pearce)10
Title V: Pros and Cons of Major Options
Problem
The Ways and Means Committee has been meeting since June in Executive
Session marking-up The Trade Reform Act of 1973. It has [Page 691] now virtually completed its second reading
of the bill, in which it has attempted to reach tentative decisions on
all policy issues. Final decisions will be made in a third reading after
the Committee staff has translated policy decisions into legislative
language.
The Committee has not yet been able to reach a decision on Title V which
authorizes the President to extend most-favored-nation treatment to
Communist countries. Debate has centered mainly on the issues raised by
the Mills/Vanik bill (also known as the
Jackson/Vanik amendment) which Vanik will offer as an amendment to Title V (Tab
A).11 The Jackson/Vanik amendment would effectively block
implementation of U.S./USSR commercial agreement because it would
prevent extension of most-favored-nation (MFN) treatment to any nation which “denies its citizens the
right or opportunity to emigrate.” It would also require the President
to suspend extension of credit or credit guarantees to the Soviet
Union.
When this issue was reached in the Committee last Wednesday (September
12) the Committee Counsel, John Martin, at the request of the Acting
Chairman, Congressman Ullman, offered a substitute amendment. The
following day, the substitute amendment was modified to take account of
several objections we raised. Congressmen Pettis and Corman agreed to
sponsor the amendment.
The Pettis/Corman amendment (Tab B) is tough, but is probably manageable.
Before the President could extend or maintain MFN treatment to a Communist country, he would have to find
(1) that the country is “evidencing reasonable progress in the
observance of internationally agreed upon principles of human rights
(including the right of free expression of ideas and of freedom of
emigration),” (2) that such country does not impose an unreasonable
emigration tax and (3) that it does not discriminate in emigration
practices “on the grounds of race, color, creed or level of education or
on the grounds of the choice of that individual as to the country to
which he desires to emigrate.” An agreement extending MFN could not have an initial term of more
than three years and could not be extended without approval of the
Congress.
Reaction to the Pettis/Corman amendment has been disappointing:
Mills—Chairman Mills has advised Vanik and Martin that he will adhere to the
Jackson/Vanik amendment and issued a tough public statement
criticizing the Soviet handling of dissident intellectuals.12
Subsequently, he reaffirmed this in a conversation with Ullman, but added
that if the Committee drops Title V from the bill, he will attempt [Page 692] to fashion a workable
compromise in the Conference. In a discussion this morning (September
15), he reportedly told Don Kendall that the
U.S./USSR agreement must be implemented, that he doubted that the
Committee could complete work on the bill by October 15 and that he
would return by that date and work something out.
Jewish Community—There has been no evident
support for Pettis/Corman in the Jewish community. Although we are
handicapped because, so far as we know, the Administration has had no
direct contact with Jewish leaders since this issue arose last week, we
understand that the view of respected Jewish leadership is that while
some settlement along the lines of Pettis/Corman will probably be
acceptable as a compromise in Conference, no responsible element of the
Jewish community is prepared to accept it at this point. To accept it
now would “pull the rug out from under Jackson.” A
“representative sampling” of Jewish leadership met Thursday (September
13) in New York and concluded that, while they would not criticize
Pettis/Corman, they would continue to adhere to the
Jackson/Vanik strategy for the present.
Jackson—Senator
Jackson and his staff (Richard Perle and
Dorothy Fosdick) have generated strong pressures against Pettis/Corman.
The 18 members of the Ways and Means Committee who co-sponsored the
Mills/Vanik bill all have felt this pressure.
Some have received calls from Jackson. All have
reportedly been under pressure from Jewish leaders (whom many regard as
responsible) in their constituencies and, despite the decision in New
York not to criticize Pettis/Corman, many of them are calling it a “sell
out.”
Against this background, Congressman Corman is beginning to lose interest
in his amendment. He advised us Friday13 that he is willing to stick with it so long as
there is any hope that it could become the law. However, he believes
that (1) Pettis/Corman probably can win in Committee, but with no more
than a one or two vote margin, (2) the Acting Chairman will not be able
to get a rule that precludes a vote on the
Jackson/Vanik amendment on the floor and, indeed, the effort to
open the rule for this purpose could result in opening it for other,
potentially destructive amendments, and (3) there is no hope of
defeating Jackson/Vanik on the floor unless there is first some movement
in the Jewish community. This is possible, but not likely. Congressman
Corman’s analysis is probably correct. In any event, it reflects a
consensus among key members of the Ways and Means Committee.
This is especially troublesome because of the situation in the Senate
where support for the Jackson/Vanik amendment seems, if any thing, [Page 693] stronger than it is in the
House. It is generally accepted that unless there is a major change in
attitude in the Jewish community, the
Jackson/Vanik amendment will be in the Senate bill. This means
that if it cannot be avoided in the House, there will be no opportunity
to work out a compromise in the Conference.
Mr. Ullman proposed, and the Chairman agreed, on
Friday (September 14), that Mr. Kissinger will be heard beginning at 2:00 P.M. on
Tuesday (September 18) and the Committee will choose on Wednesday
(September 19) among three alternatives: the
Jackson/Vanik amendment, the Pettis/Corman amendment or an
amendment to drop Title V from the bill. There is no agreement yet on
the order in which these alternatives will be considered.
The Options
Option I
Work for the adoption of the Pettis/Corman
amendment. The Administration would give full support to
adoption by the Ways and Means Committee of the Pettis/Corman amendment.
With a major effort, we could likely win on this issue, although this
must be reevaluated Monday (September 17). It will require picking up
the votes of several members now leaning the other way.
Pros
- 1.
- Success of this effort would give us a strong, responsible
compromise to take to the floor. Pettis/Corman would provide a
nucleus around which support could be rallied.
- 2.
- If we succeed in the House, it would assure an acceptable
alternative to Jackson/Vanik which will likely be in the
Senate bill.
- 3.
- While Pettis/Corman imposes tough conditions, they are manageable.
It avoids any new restrictions on credits.
- 4.
- Our support for Pettis/Corman would likely be understood and
accepted, though certainly not relished, by the Soviets.
Cons
- 1.
- It will not be easy to obtain necessary votes to secure Committee
approval of Pettis/Corman. Members are under heavy pressure from
constituents. Those who co-sponsored the Mills/Vanik
bill (18 of 25 Committee members) are especially vulnerable. Since
ultimate success of the amendment is hard to predict, most of them
will be reluctant to support it.
- 2.
- Even if the Committee accepts Pettis/Corman, there is no assurance
that Jackson/Vanik will not be substituted on the floor. This is
especially true if Chairman Mills continues his support for
Jackson/Vanik. Under new rules of the Democratic caucus, 50
members can petition [Page 694] for
the right to submit an amendment. The Chairman is then obligated not
to ask for a rule which would exclude a floor vote on the amendment.
The consensus is that Vanik
can get 50 members and that, unless there is substantial movement in
the Jewish community, Jackson/Vanik will be substituted on the
floor.
- 3.
- In other respects, the Committee is likely to report a bill giving
us substantially what we have sought. If the adoption of
Pettis/Corman provokes a major fight on the rule, the result could
be a decision to permit floor consideration of other damaging
amendments as well. We cannot rule out the possibility of an open
rule which would, for practical purposes, end any hope of getting an
acceptable trade bill from the House this year.
Option II
Seek to persuade the Committee to drop Title V from
the bill. This could probably be achieved by combining the
votes of those who oppose Jackson/Vanik with those who oppose trading with
the Soviets. Both Vanik and some
Jewish leaders have expressed concern about this possibility, the latter
because they recognize that any action which implies that the
Administration has given up on MFN or
will not press it actively now reduces pressure on the Soviet Union to
end offensive emigration practices and harassment of Jews seeking to
emigrate.
Pros
- 1.
- This may be the only way to avoid the
Jackson/Vanik amendment in the House bill. This would permit
House members of the Conference to work out a satisfactory solution,
assuming the Senate version will include Title V. Chairman Mills has said to others that he
would assist us in this.
- 2.
- Such action could exert useful pressure on responsible leadership
of the Jewish community to work out some sort of acceptable
compromise on this issue.
- 3.
- Dropping Title V from the trade bill seems preferable to enacting
it with the Jackson/Vanik amendment, since
Jackson/Vanik would block both
implementation of the U.S./USSR commercial agreement and further
extension of government loans and loan guarantees in connection with
private transactions with the Soviet Union.
Cons
- 1.
- The Soviets could regard this as an act of bad faith, despite our
best efforts to explain the problem and our tactics.
- 2.
- Title V could be permanently lost from the trade bill if the
Senate failed to add it. This would require separate legislation for
authority to extend MFN to Communist
countries.
- 3.
- There is no assurance that the Committee’s decision to drop Title
V would preclude the possibility of
Jackson/Vanik in the House bill. Vanik could be expected to seek a rule permitting a
floor vote on Jackson/Vanik even if Title V is eliminated
(the possibility of this might be reduced if Ullman could be
persuaded to ask Chairman Morgan to hold hearings in Foreign
Relations on foreign policy aspects of this issue).
- 4.
- Also, there is no assurance that Mills could (or would) fashion a feasible compromise
in Conference that would be acceptable to both the House and the
Senate. At best, this strategy postpones a final decision on this
issue until the Conference (at which point responsible Jewish
leadership may be less reluctant to break with
Jackson) and provides further time in which
to improve the climate for Congressional resolution of the
issue.
Option III
Seek to delay any resolution of this issue until all
other issues in the trade bill are resolved. The Committee will
require at least two weeks and possibly longer to complete final action
on the bill. Ullman said Friday that it might be possible to delay
action for “a week or ten days” although it would be difficult.
Pros
- 1.
- Delay would preserve our substantive options. It would avoid the
necessity for a decision before we have accurately gauged the
attitudes of various factions in the Jewish community.
- 2.
- Delay also would permit us to develop support for a compromise
(perhaps some version of Pettis/Corman) which would enable us to
implement the U.S./USSR commercial agreement. Reports suggest that
responsible Jewish leaders want a compromise that maintains
continuing pressure on the Soviet Union. Many recognize that the
Jackson/Vanik amendment is self-defeating for their purposes
(though not necessarily for Jackson’s
purposes). They seem willing to recognize that some compromise will
have to be worked out in the end, but they do not seem to recognize
that we may be locked in to Jackson/Vanik unless some sort of agreement
is reached before the bill leaves the Ways and Means
Committee.
- 3.
- Delay would give Dr. Kissinger a better opportunity to deal with the
problem as Secretary of State. The present demands on his time and
his attentions have limited his participation in this effort.
- 4.
- If the Ways and Means Committee acts Wednesday (September 19)
either to adopt the Pettis/Corman amendment or to drop Title V from
the bill, Vanik will have two
weeks and perhaps longer to develop his strategy on the rule and
support in the House. A coalition [Page 696] with organized labor cannot be excluded. On
the other hand, if a decision on this issue can be delayed until the
Committee is prepared to report a bill, there will be little time
(perhaps no more than a day or two) for this to develop.
Cons
- 1.
- There is no assurance that Ullman can delay a decision. Vanik will oppose any delay,
pointing out, among other things, that since Ullman has publicly
announced a vote on Wednesday (September 19) delay will embarrass
the Committee.
- 2.
- Because Ullman has publicly expressed his opposition to
Jackson/Vanik, a delay would be interpreted as evidence that
he lacks the votes to beat it.
- 3.
- Unless a successful effort with the Jewish community can be
mounted swiftly, delay might actually reduce chances that Option I
or Option II could succeed. Jackson/Vanik forces also will be active
and, on the record to date, they have used time more effectively
than we have.
- 4.
- We have built up considerable momentum since Ways and Means
resumed Executive Sessions on September 5. Delay on this issue,
taken at our instance, increases the risk of delay in completing
work on the bill as a whole.
