113. Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • US/Canada Trade Discussions

Assistant Secretary of Commerce Harold Scott has written to give you his version of what has taken place in our trade negotiations with Canada since August 15, 1971. He states that in the seven major meetings which have been held at the Assistant Secretary level and above, the US never had an agreed-upon position or objective. Rather, [Page 434]the US probed for areas where Canada might be agreeable to either unilateral concessions or concessions for which the US would pay a minimal cost. He believes, further, that the mood in these discussions—except for the December 6 meeting at the White House2—was conciliatory, courteous and characterized by the Canadians’ desire to be helpful without abandoning their traditionally tough negotiating stance and their awareness of their domestic political climate. In Scott’s opinion, had the US ever made a firm proposal the Canadians would have gone further than they have. However, not knowing what the US objectives were, the Canadians displayed caution in commenting on individual points until the dimensions of the entire package were clearly visible to them.

Scott believes that, given the importance and magnitude of US trade and investment and its critical contribution to overall US/Canada relations, it is important that the President understand that throughout the trade discussions the Canadians demonstrated a desire to be helpful and at no time displayed an indifferent, intransigent, or truculent attitude.

Scott’s observations are on the whole well taken. However, it is true that Paul Volcker—privately and outside of the interagency negotiating context—provided the Canadians with a trade package acceptable to the U.S. This was rejected by the Canadians. And it does appear that in rejecting the Volcker package they backed off at least one commitment which we thought we had obtained from them in earlier discussions.

The moral of this unpleasant saga in our relations with Canada is that in the future we should have a clear picture of the type of package we want and ensure that the country with whom we are negotiating does likewise, and that we should scrupulously avoid “going public” to the point that the issues become so politically charged that it is difficult for either country to enter into compromises necessary to reach a mutually satisfactory agreement.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 671, Country Files—Europe, Canada, Vol. III. No classification marking. Sent for information. Concurred in by Sonnenfeldt. Initialed by Kissinger.
  2. See Document 109.