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

321. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, October 3, 1980

SUBJECT

• US–China Grain Agreement

Last May, the Chinese expressed interest in negotiating a bilateral grain agreement. Before we could initiate discussions, the news leaked, and the Chinese withdrew their offer. Recently, USDA renewed contacts with the Chinese, and we now have the outlines of an agreement which we hope to sign in Beijing next week.

The agreement will call for the Chinese to purchase between 6 and 8 million metric tons (MMT) of wheat and corn each calendar year for a four-year period (1981–84). The Chinese believe that this amount is “realistic” and reflective of their probable demand for US grain. A higher level would obviously have greater public impact here, but it would create problems with Canada and Australia, who are traditional suppliers to China, and set a precedent for any future negotiations with the Soviets on grain. We plan to accept the 6–8 MMT band.

We expect that the Chinese will accept a condition calling for prior mutual agreement if China desires to purchase less than 6 MMT or more than 8 MMT. We will make clear in our public announcements that we intend to approve purchases above 8 MMT and that the agreement is not designed to restrict sales to the PRC.

A grain agreement will benefit both sides. The Chinese want one because of the certainty it provides in the planning process. An agreement is in our interest because it will: (1) add another element to our expanding bilateral relationship; (2) guarantee us a substantial share of a new and growing market for imported grain; (3) facilitate policy planning on such domestic farm issues as acreage set-asides and loan support levels; and (4) deflect criticism about the grain embargo.

There are some drawbacks as well: (1) Any disparities in the buyer’s favor between the US–China and US–Soviet agreements will likely become a precedent for Soviet demands in any renegotiation of the latter. We can minimize this problem by concluding an agreement similar to the US–USSR arrangement. (2) A US–China agreement will intensify producer pressure on the Canadian and Australian governments to declare an end to their cooperation in the partial grain embargo against the USSR. This danger will be substantially less if we stay in the 6–8 MMT range. We would have preferred to consult with these governments in advance, but did not do so for fear of leaks. A call or personal message to Trudeau and Fraser before any public announcement will help to avert adverse government reaction in Canada and Australia. I will furnish talking points for such calls (or proposed messages for transmittal by cable) when we are ready to initial the agreement.²

The Chinese have moved more rapidly toward an agreement than we anticipated. State and USDA have sent a small team to Beijing this week, and they expect to have an agreement ready for signature by October 6. If they are successful, you might consider making the announcement personally on October 7 or 8.³ Until an agreement is concluded, however, we are holding this information close because any premature public discussion would almost certainly cause the Chinese to withdraw from the negotiations.⁴

1. Source: Carter Library, Brzezinski Donated Material, Subject File, Box 37, Serial Xs–(10/80–12/80). Secret. At the top of the page, Carter wrote, “Zbig. J.” Underneath, someone wrote, “10/07/80.” Sent to Brzezinski under an October 3 covering memorandum from Deal. (Ibid.)
2. Carter wrote, “messages” in the right margin.
3. Carter wrote, “yes” in the right margin.
4. Carter wrote, “ok” in the right margin. A U.S.–China Grain Agreement was signed in Beijing on October 22.