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

295. Editorial Note

On June 18, 1975, Secretary of State Henry Kissinger met with senior Department of State officers and Daniel Patrick Moynihan, soon to begin duty as Representative to the United Nations, to discuss U.S. participation in the Seventh Special Session of the UN General Assembly, scheduled to convene on September 1. Kissinger told Moynihan and his staff that “we must make a serious effort to address the concerns expressed by the nonaligned countries. We need a forward-looking position and only on that basis can we develop tactics for dealing with this bloc. I don’t want to take an ideological stance and simply argue the virtues of the market economy.” He stressed that, “Our basic strategy must be to hold the industrialized powers behind us and to split the Third World. We can only do that if we start with a lofty tone and a forthcoming stance. That alone will permit us to hold the industrialized countries together. Bloc formation in the Third World can be inhibited only if we focus attention on practical measures in which they have a tangible stake. We must speak early in the session and put forward specific and progressive ideas—something for our friends to hold on to. Such a position can hold the stage for several weeks. Whether we can avoid confrontation is more problematic. I think the OECD speech strategy has worked quite well to date. That is the foundation on which we must build.” Kissinger also spoke of his wish “to try to bring EPB along procedurally. What we have to avoid is this atmosphere of acrimony. I want to fight the issues on substance. I don’t want to compound the problems by springing things on them at the last minute, giving them three days to clear a major speech. This creates resentments which complicate the process of implementation.” If interagency agreement on substantive issues proved elusive, “then I can take the issue to the President and he will support me.” (National Archives, RG 59, Central Foreign Policy Files, P820123–1250)

In meetings on July 16, August 6, and August 13, Kissinger and his senior staff reviewed the progress on the drafting of his speech at the Special Session and discussed strategy and issues likely to arise there. (Ibid., P820123–1693, P820123–1987, and P820123–1920) Kissinger also discussed the evolving U.S. position with Congressional representatives on June 17, July 24, and August 20. (Ibid., P820123–1297, P820123–1802, P820123–0352)

Department of State officers were not the only administration officials planning for the Special Session. On July 23, Assistant Secretary of the Treasury Gerald Parsky forwarded an interim progress report on the work of the joint Economic Policy Board/National Security Council Commodities Task Force to the Economic Policy Board. The goal of the Task Force, which was jointly chaired by the Departments of the Treasury and State, was an agreed U.S. position for the Special Session. (Ford Library, L. William Seidman Papers, Box 50, Economic Policy Board Subject File, Commodities—International) During a July 29 EPB Executive Committee discussion of the interim Task Force report, there arose “considerable debate as to what the U.S. position might be at the U.N. General Assembly in September.” The Committee decided that the “areas of disagreement between the various members of the Executive Committee will be committed to writing and options are to be developed for a Presidential decision.” (Ibid., U.S. Council of Economic Advisers Records, Alan Greenspan Files, Box 58, Economic Policy Board Meetings, EPB—July 1975)

On August 8, the EPB Executive Committee reviewed an updated EPB/NSC Task Force report. According to the meeting minutes, “The discussion focused on the philosophical approach on commodity policy which the United States Government should take at the UN Seventh Special Session in September, the U.S. Government position on a tin agreement, and our positions on buffer stockpiles, investment in minerals development, compensatory financing, and various individual commodities.” Secretary of Labor John Dunlop “emphasized the need for timely and careful consideration of the draft language which would be used outlining our philosophical approach to commodity policy. Ambassador Dent recommended that in our approach to commodity policy we emphasize the promotion of agricultural technology transfer, the development of agricultural production structures, and the need for a liberalization of agricultural trade to benefit all consumers throughout the world.” The committee instructed Parsky and Deputy Assistant Secretary of State Julius Katz to “prepare a brief document outlining any remaining decisions necessary with respect to U.S. commodity policy on such issues as increased investment in minerals development, compensatory financing, and a U.S. position on the Tin Agreement.” (Ibid., EPB—August 1975)

Also on August 8, National Security Council staff member Robert Hormats wrote Kissinger: “On the issue of commodities, State will have provided you with an analysis of a recent report (Tab B) of the EPB/NSC interagency task force on commodities. As State will point out, the report has not pursued adequately a number of the potential initiatives which the United States could take, is especially cool on the idea of buffer stocks (which have not been adequately explored to the point that we can make any judgment at all), and unduly restricts the International Finance Corporation of the World Bank to participate in private investments in raw materials in the developing countries. State and Treasury are attempting to work out a paper which highlights their differences on the commodity issue.” (Ford Library, National Security Adviser, Presidential File of NSC Logged Documents, Box 57, NSC “NS” Originals File, 7505449—Meeting on International Economic Policy Issues)

On August 27, the EPB/NSC Interagency Task Force issued another report. According to the summary of the report, “the Task Force agreed to the following principal conclusions: (a) Price-fixing commodity agreements are an inefficient means of transferring resources to LDCs. (b) Commodity agreements for those commodities produced in the United States which seek to maintain prices within an agreed range through the use of export or production controls are not economically desirable from the consumer’s or, in many cases, the producer’s viewpoint. (c) There was no general conclusion about the efficacy of commodity agreements using other techniques for stabilizing prices. One preliminary econometric simulation indicated that a buffer stock could reduce price fluctuations with relatively small operating costs under a certain set of circumstances, but it would entail substantial capital costs and in some cases, have other drawbacks. (d) The United States should discuss commodity agreements on a case-by-case basis. International discussion should stress means to strengthen the commodity markets and to deal with particular commodity problems. (e) The United States should pursue supply-access agreements through the MTN. (f) While the United States should adopt a flexible approach to individual commodity negotiations, it should continue to oppose indexation, generalized multi-commodity agreements, and specific commodity agreements that attempt to maintain prices above long-term market levels.” (Ibid., L. William Seidman Papers, Box 58, Economic Policy Board Subject File, EPB: Special Issues/Action)