Foreign Relations of the United States, 1977–1980, Volume XIII, China

229. Summary of a Policy Review Committee Meeting¹

Washington, March 13, 1979, 3–3:50 p.m.

PRC MEETING ON U.S.–CHINA ECONOMIC RELATIONS

Secretary Blumenthal chaired a meeting of his PRC Committee on U.S.–China Economic Relations.² He summarized the accomplishments of his trip to China, essentially repeating the same points he made in his March 6 meeting with the President.³ He outlined the principal features of the claims/assets settlement and of the Joint Economic Committee we have established with the Chinese to plan for our evolving economic relationship.

Blumenthal then outlined the upcoming issues in our relations with China: (1) negotiating a Trade Agreement, the responsibility for which falls under Julius Katz at State; (2) preparing recommendations for the President on how to handle MFN for China—whether to use the waiver, how to relate MFN for China with MFN for the Soviet Union, and when to do this (responsibility for preparing the appropriate decision memorandum rests with Blumenthal and Vance); (3) preparing a policy on extension of ExIm Bank credit for China trade, the responsibility of which falls under the ExIm Bank; (4) planning the agenda for Kreps’ trip from May 7–17, with securing business facilitation measures an important objective (Kreps will plan her agenda in close coordination with Blumenthal and Vance); and (5) deciding whether to seek maritime agreement with the PRC. It is not clear whether it is advantageous for us to seek such an agreement, and Kreps and Vance are to consult on this issue.⁴

1. Source: Carter Library, NSC Institutional Files (H-Files), Box 74, PRC 097, 3/13/79, China. Confidential. The meeting took place in the Roosevelt Room of the White House. Oksenberg drafted this summary for Brzezinski, along with a transmittal note to the President in the event that Brzezinski chose to submit it to Carter. It is not clear whether Carter saw it.
2. See Document 228.
3. See Document 225.
4. In anticipation of Kreps’s visit to China, it was agreed at the March 13 PRC meeting to ask “the Transportation Subcommittee of the Policy Review Committee on U.S.–China Economic Relations (formerly the Civil Aviation Subcommittee) to prepare a coordinated USG position on a maritime agreement with China.” (Minutes of PRC meeting, March 13; Carter Library, NSC Institutional Files (H-Files), Box 74, PRC 097, 3/13/79, China) In its report of April 11, the Transportation Subcommittee stated that although it had held three meetings since March 13, it “is unable to resolve differences among the agencies” due to disagreement over cargo-sharing. The Departments of Commerce (including the Maritime Administration), Transportation, Labor, and Defense, and the Federal Maritime Commission favored an early cargo-sharing agreement with China because, “in the absence of an agreement, the Chinese will direct cargo onto their rapidly expanding merchant fleet for cost and hard-currency considerations.” The Departments of State, Agriculture, Treasury, and Justice opposed such an agreement “on the ground that it increases transportation costs by creating inefficiencies and rigidities.” (Carter Library, NSC Institutional Files (H-Files), Box 74, PRC 103, 4/30/79, US–China Economic Relations)