Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

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 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.

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.

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 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 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, 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 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 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.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 403, Subject Files, Trade, Vol. VI, April 8–December 1973. Confidential; Sensitive; Outside the System. Sent for very urgent attention. Kissinger initialed the memorandum.
2. In the memorandum at Tab B, attached but not printed, Sonnenfeldt reported on the status of the Title V issue, concluding, “Ullman and Corman seem again to be reaching the conclusion that the only viable alternatives in Committee are Jackson–Vanik or dropping Title V. The key, if there is any, is the Jewish Community. All soundings by Ways and Means people show the Washington Jewish lobbyists solidly behind Jackson–Vanik and opposed to the compromise.”
3. On September 15, Sakharov appealed to U.S. Congressmen to support the Jackson–Vanik amendment. That same day, a group of Soviet Jews alleged that Deputy Assistant Secretary of Commerce for East-West Trade Steven Lazarus had pressured them during a February trip to Moscow “to desist from public protest lest they endanger the Administration’s trade bill” and “to appeal to Jewish organizations in the United States to drop their support for the Jackson amendment.” (The New York Times, September 16, 1973, p. 1)
4. Richard Perle was a staff aide to Senator Jackson.
5. Henry Kearns was the President and Chairman of the Export-Import Bank.
6. September 19.
7. September 18. According to a September 13 memorandum from Timmons to Scowcroft, “The President and HAK agreed to Al Ullman–Herm Schneebeli request to brief an executive session of Ways and Means Committee next Tuesday afternoon on urgent need for MFN Soviet Union.” (National Archives, Nixon Presidential Materials, NSC Files, Box 317, Subject Files, Congressional, Vol #9, June–September 1973)
8. September 14.
9. Limited Official Use. Copies were sent to Flanigan, Eberle, Timmons, and Sonnenfeldt.
10. Limited Official Use.
11. Tabs A and B are attached but not printed.
12. Printed in The New York Times, September 10, 1973, p. 1.
13. September 14.