95. Draft Telegram From the President’s Deputy Assistant for National Security Affairs (Scowcroft) to Secretary of State Kissinger1
SUBJECT
- Countervailing Duty Investigation Announcement—Brazil
Shultz is determined to announce a countervailing duty investigation on footware from Brazil this week. He wants you to realize that [he] [Page 268] is not announcing formal proceedings, but only starting the information gathering process which he believes goes a long way towards being as consistent as he can with what you told the Brazilian Foreign Minister. Kubisch and Hennessy have explained to Shultz the progress you made with the Brazilian Foreign Minister, but Shultz feels he must move ahead and that he has quasi-judicial authority in this field. He believes it is essential to take a concrete public action before hearings on the trade bill start next Monday. Shultz’ position is a strong one, since we are seeking more flexible countervailing duty authority and the Brazilian shoe case is a clear-cut instance of an export subsidy. You should also be [1½ lines not declassified] and Treasury is not, therefore, overly impressed by the commitment the outgoing Foreign Minister gave you.
At our request, Shultz agreed to delay his action from February 28 to March 1 to give you a chance to decide how to proceed. Nothing but your personal intervention could hope to change Shultz’ position.
There are essentially three choices:
First, let Shultz go ahead on Friday. If this is done, Kubisch will arrange to have our Ambassador talk with the Brazilian Foreign Minister in advance. He would emphasize that our domestic situation and the importance to all Latin America and Brazil of the over-all trade bill including preferences require action now on footwear which is a domestic issue. Moreover, he would stress that this is only an investigation and there will be time to find a mutually satisfactory solution with the new government while the investigation proceeds.
Second, you could send a message to Shultz explaining your commitment to the Brazilian Foreign Minister, noting the poor timing so soon after your multilateral and bilateral commitment in Mexico and suggesting that we make clear to the Congress our intention to move quickly on the matter with the new Brazilian Government after March 15.
Third, you could send a strong message to Shultz urging delay on the organized investigation for overriding foreign policy reasons and indicating that this issue is sufficiently important that the decision between our Latin American foreign policy interests and our domestic and trade bill interest can be made only by the President.
We have discussed these options in detail with Jack Kubisch who agrees that they are the alternatives and believes you should make another try with Shultz along the lines of option two. Kubisch says he has done everything he can with Treasury. Our feeling is that there is probably no way Shultz can be headed off and that simply starting an investigation of the facts can be explained to the [Page 269] Brazilians as outlined above. Therefore, we would recommend either of the first two options.
As a footnote, you should be aware that Shultz also has on his desk a similar investigation on Colombian cut flowers. We believe we can get him to delay action for at least a few days while the issue is discussed with the Colombians for the first time.
Warm regards.
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Summary: In light of Shultz’s preparations to announce a countervailing duty investigation regarding Brazilian footwear, Scowcroft presented to Kissinger options for minimizing damage to bilateral ties between the United States and Brazil.
Source: Ford Library, National Security Adviser, Scowcroft Daily Work Files, Box 6, 2/19–28/74. Secret; Sensitive. Kissinger was in Jerusalem February 27–28. On February 20, Kissinger, in a conversation with Gibson Barboza in Mexico City, stated that he would do the best he could to delay the application of countervailing duties on Brazilian footwear. (Telegram 1556 from Mexico, February 22; National Archives, RG 59, Central Foreign Policy File, [no film number])
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