44. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon1

  • SUBJECT
    • Application of Economic Pressure on Canada

You asked for ways in which you could apply slight pressure on Canada in some economic area where Prime Minister Trudeau’s personal prestige is involved.2 There are two such possibilities, oil and wheat.

Oil

Crude imports from Canada are now controlled “voluntarily” by the Canadians themselves. Present Canadian exports to the Eastern U.S. are running at about 570,000 barrels per day, however, compared with the agreed level of about 330,000 barrels.

Negotiations have been underway to reduce Canadian shipments. The negotiators agreed in early February,3 on an ad referendum basis, to a level of 400,000 barrels per day. Our starting figure in the negotiations was 360,000 barrels. However, the Canadian Cabinet, with the Prime Minister in the Chair, decided that Canada would not control exports below 440,000 barrels. (They would have gone lower had we promised free entry for their oil in 1971.) Our willingness to discuss a common energy policy has not been sufficient to persuade them to take [Page 106]the distinctly unpopular step of restricting exports to an acceptable level.4

Peter Flanigan is now proposing,5 with my concurrence, that you approve a unanimous recommendation by General Lincoln, the State Department, and other members of the interagency Oil Policy Committee that the U.S. restrain imports of Canadian oil at a level lower than what we agreed in the most recent negotiations—as a penalty for their refusal to control their own exports. The level of restraint would be 395,000 barrels per day—and thus represents a slap at the Canadians for their uncooperative attitude.

Oil has become an important political issue in Canada, partially because of the discussions about a change in U.S. oil policy and partially because of Canadian tenderness on questions of sovereignty in transporting oil from the north slope discovery. The proposed new restraint action would affect Trudeau personally, since he participated in the decision not to agree to restraint levels we could tolerate. The fact that our quota level will be lower than what we previously were willing to accept will amount to an exhibition of our economic power. The Canadians will see this as an indication of our impatience.

By going this far—but no further—in our oil relations with Canada, we can make a gesture of disapproval without upsetting, here or abroad, the generally delicate oil situation.

[Omitted here is material unrelated to oil.]

Recommendation

That you sign the proposed proclamation to restrict Canadian oil,6 at a level lower than we had originally agreed to negotiate, to exercise the desired economic pressure on Trudeau.7

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 367, Subject Files, Oil 1970. Secret. Sent for action. The date is handwritten. A notation on the memorandum indicates Kissinger saw it.
  2. As related in a February 9 memorandum from Haig to Sonnenfeldt and Bergsten. (Ibid., Box 670, Country Files, Europe, Canada, Vol. I)
  3. During the meetings on February 10 and 11, the United States and Canadian officials discussed the “short term problem of limiting flow of oil and the long term goal of achieving a free exchange of energy across the board.” The Canadians also discussed the domestic, economic, and political issues they faced in their export and import policies, the Task Force Report, coal, electricity, and uranium. They stated that the Cabinet had to make any decisions on the export levels of Canadian oil into the United States. (Memorandum of conversation; ibid., RG 59, Central Files 1970–73, PET 1 CAN–US)
  4. Rogers wrote Canadian Secretary of External Affairs Sharp on February 27 that although Canada found it “impracticable” to limit its oil exports into the United States, he believed that “our longer-term interests lie in understandings about the freest possible exchange of energy materials between the United States and Canada.” (Ibid., PET 17–2 CAN–US)
  5. As related in a March 4 memorandum from Bergsten to Kissinger. (Ibid., Nixon Presidential Materials, NSC Files, Box 367, Subject Files, Oil 1970) On March 9, Flanigan wrote to Nixon that he should sign a proclamation to establish a “temporary, formal limitation” on the imports of crude and unfinished oil from Canada, due to the “breakdown of voluntary controls” which had impaired the management of the Oil Import Program. Pointing to Trudeau’s role in the Canadian decision not to limit its exports to the United States, Flanigan referred to the Canadian attitude as “uncooperative.” (Ibid., White House Special Files, Subject Files, Confidential Files, Box 63, [CF] TA 4/Oil 3–1–70 to 11–12–70)
  6. Attached but not printed. The Proclamation limited Canadian crude imports into the United States to 395,000 bpd from March 20 to December 31, 1970.
  7. Nixon initialed the approve line on March 10.