238. Memorandum From the Counselor (Sonnenfeldt) to Secretary of State Kissinger 1
The attached (Tab A) is a delicate matter. The British are clearly on the verge of a number of restrictive trade measures. These would be quite consistent with their internal economic actions, recently announced.
At Rambouillet, they resisted flat reaffirmations of the trade pledge and frankly indicated that they might have to take certain specific protective steps. The final statement was, in accordance with British wishes, drafted somewhat less categorically than we would have liked.[Page 759]
The President, in his trade presentation, referred to the possibility of limited emergency trade measures in particularly acute or unusual circumstances and through consultations. Seidman paraphrased this in his public press conference. I take it you heard no other Presidential statement in response to Wilson’s own foreshadowing of possible trade actions. If so, my impression is that what the British contemplate would go beyond what the President was saying and the British are stretching the quote to bless what they have in mind.
For us, the problem will be that when our press, and others, get through with commenting on the British moves, they will quickly imply, or state explicitly, that this shows the fragility, if not futility, of the economic summit (except for the monetary agreement which is already either being minimized or pictured as showing that Giscard in fact got the monetary conference he originally proposed since this was the only concrete agreement). What has so far been on the whole a positive assessment, both inside and outside the Administration could thus gradually become sour.
On the other hand, it is very clear that for the British these proposed actions are highly important. As far as I know there is no great controversy about them in the Cabinet, except that some want even more. Consequently, a message from you to Callaghan, especially one that accuses the British of distorting the President’s meaning—which they in fact have done—will not be welcome, nor helpful in internal British debates, if any remain.
I think there is a real dilemma. Possibly a less potentially explosive form of intervention by you would be a talk with Ramsbotham, making essentially the points in the note but less formally.
I do think we must make at least a record of having tried to forestall this British action.
Action Memorandum From the Assistant Secretary of State for European and Canadian Affairs (Hartman) and the Acting Assistant Secretary of State for Economic and Business Affairs (Katz) to Secretary of State Kissinger
Washington, November 20, 1975.
Letter to Callaghan on Possible British Trade Restrictions
There are new indications that the British are considering giving in to domestic pressures to adopt import restrictions in a few industry sectors, such as electronics, footwear and textiles. A senior British Treasury official hinted as much at an OECD meeting on Tuesday (and provoked a strong negative reaction from all).
Moreover, Prime Minister Wilson, in an apparent effort to give such action an American benediction, has just stated “We do not rule out protectionist measures for particular industries suffering or threatened with serious injury as a result of increased imports, on the basis of what President Ford described as particularly acute and unusual circumstances. There have been some signs of lethal attacks directed to destroying two or three sectors of industry for the permanent future.” In our view Wilson has taken the President’s remarks, which were designed to allow for limited anti-dumping, escape clause and countervailing duty type actions, where justified, considerably out of context in this reference.
Adoption by the British of restrictive measures would dash the hopes raised at the Summit, increase protectionist pressures in all the industrialized countries, and could lead to an avalanche of restrictions and the demise of the OECD trade pledge.
We recommend that you move now to reassert the U.S. position against trade restrictions in a letter to Foreign Minister Callaghan. Such a reassertion would also be helpful to those in HMG who oppose a UK resort to import restrictions.
That you approve the attached telegram containing the text of a letter to Foreign Minister Callaghan.
an attached memorandum concerning the possibility of UK restrictive trade
Source: National Archives, RG 59, Records of the Office of the Counselor, Helmut C. Sonnenfeldt, 1955–1977, Entry 5339, Box 4, Britain 1975. Eyes Only. The attached memorandum is confidential, exdis; drafted by McCarthy in EUR/RPE on November 20; and concurred in by Glitman and Hormats. Also attached but not published is a draft telegram containing the text of a letter from Kissinger to Callaghan. Kissinger did not indicate his preferences among the options proposed in the attached memorandum. At the top of Sonnenfeldt’s memorandum, Kissinger wrote, “Hal—You do it with Ramsbotham.”↩