139. Memorandum From John Renner and Michel Oksenberg of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)1


  • PRC on US–China Trade

As you know from evening reports, we have been exploring the feasibility of expanding trade with China and negotiating a US–China trade agreement. Preliminary analysis suggests that there are no unsurmountable technical obstacles. Thus, it is worthwhile to examine whether it is in our national interest to move in this direction and to assess the probable strategic consequences.

To begin preparing for a PRC review of this question, we have written the outline at Tab A to serve as the basis for drafting the paper [Page 560] to be considered at the PRC meeting.2 We plan to call together a small group from interested agencies and assign drafting responsibilities.

It is not our intention to reopen PRM 24, Part 3, on dual purpose items.3

Negotiating a trade agreement with China would enable us to put the question of orderly marketing in a larger context. In fact, the Trade Act of 1974 requires it.

While settlement of the financial claims issue is not a prerequisite for a trade agreement, the Johnson Debt Default Act makes it illegal for any American institution or person to make a loan to any foreign government in default of its financial obligations to the United States. As a practical matter, we should try to move the trade and claims negotiations along on parallel tracks.


That you approve this approach.4

  1. Source: Carter Library, National Security Council, NSC Institutional Files (H-Files), Box 42, PRM–24 [1]. Secret. Sent for action.
  2. A draft outline, October 5, on “US–China Trade” for the Policy Review Committee is attached but not printed.
  3. See Document 67.
  4. Brzezinski checked the Approve option. Underneath is written, “10–10–78.”