20. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to the Chairman of the Under Secretaries Committee1 2

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  • US Position for Second Session of IA–ECOSOC Special Committee

The President wishes to follow-up the policy directions he outlined in his October 31 speech, and the positions we have already taken in the IA–ECOSOC, with further specific actions and action proposals. He believes that the forthcoming round of IA–ECOSOC talks in Caracas provides an excellent opportunity to do this. He considers that meeting to be as important as its predecessor, and believes a forthcoming, positive US posture at the meeting is essential to the development of his policy line.

The President wishes the United States to take the initiative in the Caracas meeting and present specific and concrete proposals. He wishes our position to be imaginative and positive. He does not wish the style of partnership and dialogue, or the necessity for negotiation, to be interpreted as passivity or too reactive a posture.

The President has directed that the NSC Under Secretaries Committee again assume responsibility for the preparation and coordination of the US positions for the Caracas meeting. The Committee should submit to the President for approval a report on all the positions and proposals it decides upon—as well as any unresolved issues for decision—no later than January 15, 1970.

The Committee should prepare positions, initiatives and responses on all the issues and problems pending in the IA–ECOSOC forum; it should prepare specific implementing action plans with regard to those things which we agreed to do or to which we are committed; it should consider what new initiatives and proposals may suitably be introduced into this forum and should seek to include these in the US position as appropriate even though they may be “new business”.

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Among the items to be covered the President wishes the Committee to be sure to address the following:

1. Nuisance Duties—The illustrative list presented at the November meeting should be substantially expanded. The report to the President on this item requested in NSDM 30 should include a new recommended list.

2. Generalized Trade Preferences—The positive list of products which we would include in a generalized preference scheme should be made as effective as possible. Products of interest in Latin America should be included, and special consideration should be given to inclusion of fish products with a view to the collateral help this will give the US position in the CEP four-power fisheries talks.

3. Standstill Commitment and Compensatory Mechanism—The President wishes to consider a positive response to the Latin American request that the United States agree to a new standstill commitment, including provision for compensation to countries adversely affected by any new restrictive measures on the part of the United States. Accordingly he wishes a careful exploration of what may be feasible in this regard and recommendations, including a discussion of options where appropriate.

4. Initiatives in the Commodity Field—The President would like to propose initiatives with regard to basic commodities aimed at assisting those developing nations which may suffer serious balance of payments problems due to sharp declines in commodity prices, loss of production from such factors as drought or some similar circumstance. Consideration should be given to schemes, such as a supplementary finance plan that might involve recourse to a special fund when balance of payments problems corresponding to defined criteria are encountered. The possibility of additional commodity agreements might also be considered. Since this area will require some careful staffing, it is recognized that it may not be possible to present careful recommendations prior to the January 26 meeting. If no, recommendations should be presented by February 15.

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5. Untying the Componentry Rule—The President would like to take positive action in this area, and wishes consideration to be given to substantially liberalizing the 90/10 componentry rule for procurement under AID loans. Recommendations should be provided as to various ways this might be done.

6. Assistance to Economic Integration—The President wants the US to be able to offer specific proposals or evidence of our willingness to assist Latin American regional integration efforts, over and above those already programmed or planned. Consideration should be given, for example, to announcing earmarking of specific funds in the FY-71 budget or to announcing our willingness to finance payment schemes for regional or sub-regional groups.

7. Assistance for the Development of National and Regional Capital Markets—The President wishes concrete proposals made to implement our commitment to provide assistance—both technical and capital—for the establishment of national and regional capital markets in the region. He also wishes the Committee to explore possible ways to improve Latin American access to US capital markets.

8. EEC Special Fund in the IDB—The President would like to take an initiative to encourage the European Economic Community to provide additional development assistance to Latin America through a special fund in the IDB. Consideration should be given to offering to match on a one-to-one basis the contributions which members of the EEC might make to a special fund which would be administered by the IDB, with procurement under such special funds permitted in all donor countries as well as the hemisphere.

9. Debt Service—The President has directed that we make further concrete proposals to implement his announcement that we would seek some action on the debt burden problem. He has directed that the Committee propose a specific plan of action to: a) make clear to the IMF and the IBRD that the US is serious in seeking solutions to debt service problems, and b) to initiate studies of the debt service problem, develop criteria and propose appropriate remedies to deal with problems before they reach crisis proportions. Consideration should be given to proposals for specific action with inter-American entities such as immediate joint consultations with the IMF and IBRD by US and Latin American or OAS officials.

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10. Multilateral Frameworks—The President wishes to pursue the policy proposal to develop a multilateral framework for development assistance. Specific proposals to implement and illustrate this concept should be prepared for the January 26 meeting. These should include proposals for incremental strengthening and expansion of functions of CIAP and IDB, for the operations of the Special Committee and for other alternative mechanisms.

Henry A. Kissinger
  1. Source: National Archives, RG 59, Deputy Assistant Secretary (Economic Policy), Subject and Country Files: Lot 72 D 464, IA–ECOSOC, Caracas, January and February 1970. Confidential. The Committee’s report, January 21, 1970, is ibid., National Security Council Under Secretaries Committee Decision Memorandum, 1969–1977; Lot 83 D 276, NSC U/DM 25. Kissinger communicated Nixon’s responses to the Committee’s recommendations in NSDM 39 (Document 23).
  2. As a follow-up to President Nixon’s October 31 speech on U.S. policy toward Latin America, Kissinger directed the Under Secretaries Committee to submit a report to the President that outlined U.S. positions on various issues that would be discussed at the forthcoming round of IA–ECOSOC talks.