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

237. Memorandum From Michel Oksenberg, James Cochrane, and Benjamin Huberman of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, April 26, 1979

SUBJECT

• Export Licenses for China

Bureaucratic confusion currently exists on how to deal with export license applications for China. Commerce needs instructions from you to resolve the matter.

The issue concerns the appropriate end-use forms and visitation guarantees which Commerce ought to require from companies seeking export licenses for China. In the absence of diplomatic relations, the Chinese refused to use our normal government-to-government forms. This caused numerous delays and problems in processing Chinese exports.

However, customary practices developed, and Commerce came to approve China export license applications which were accompanied by distinctive Chinese end-use statements, usually in the form of a signed letter, and visitation guarantees couched in special terms. For example, the Chinese indicated they would allow a company to visit its equipment to inspect its performance four times a year, while not admitting that this was a visitation guarantee.

In January 1979, we indicated to the Chinese that with our relations normalized, we would expect U.S. exporters to supply properly filled-out forms with their applications for license and export to China, as we do for all other countries. Our goal was decided upon at a January 5 meeting of the PRC Subcommittee on U.S.–China Relations.²

The issue now is on what date we will begin to enforce the same procedures for China that we enforce for other communist countries.

Commerce seeks guidance from the President. Without such guidance, and given our goal of “even-handedness” in the treatment of all communist countries and in the light of the January notice, it has felt impelled as of March 1 to enforce the procedures it uses for other communist countries. This has caught many companies by surprise.

Without instructions from you indicating the President’s wishes, Commerce is now unwilling to process to completion approximately 110 license applications and is demanding that the license applicants go back to the Chinese with requests that they sign standard forms. However, many of these applicants have already obtained letters and visitation guarantees in accordance with the previous custom for obtaining export licenses to China.

In view of all the other matters about which we are leaning on the Chinese, and given the President’s desire for our China relationship to move forward smoothly, we recommend that you send the instructions at Tab A to Commerce,³ indicating that Commerce should use pre-normalization procedures with China, and work gradually to seek Chinese compliance with normal procedures.

This memorandum was drafted in the presence of Frank Weil and Stanley Marcus, of Commerce, and Scott Hallford, representing Holbrooke. Both Commerce and State want the instructions from you.

Recommendation:

That you sign the memorandum at Tab A to the Department of Commerce.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 9, China (PRC): 4–5/79. Confidential. Sent for action. Oksenberg initialed on behalf of Cochrane and Huberman and noted that they had approved the text.
2. No record of this meeting has been found.
3. Tab A, an April 30 memorandum from Brzezinski (signed by Aaron) to Kreps, is attached but not printed. It states, “The President requests you to proceed with the processing of license applications for exports to China, using the procedures in place prior to normalization. In particular, you should deem as satisfactory the end-use statements and visitation guarantees that you previously deemed acceptable.”