Foreign Relations of the United States, 1977–1980, Volume XVI, Southern Africa

305. Memorandum From Henry Richardson of the National Security Council Staff to the President’s Deputy Assistant for National Security Affairs (Aaron)¹

Washington, August 30, 1977

SUBJECT

• South Africa as Possibly Practicing an International Boycott Under US Law

The 1976 Tax Reform Act obliges Treasury to maintain a list, updated quarterly, of all countries which, under a very confused statutory definition, are designated as practicing an international boycott. The consequences of such a designation are, generally, public notification as such, plus administrative measures taken by Treasury against companies doing business in that country to diminish their write-offs for taxes paid to the latter. Treasury has raised the possibility that the statutory definition might fit South Africa’s refusal to put blacks in managerial positions. They have requested our input whether as a matter of policy South Africa ought to be included on such a list; theirs is the final responsibility.

The balance of opinion among lawyers in both Treasury and State is that while South Africa could theoretically and technically fit under the statutory definition, such an application would probably be subsequently overturned in court, because of the relatively clear Congressional intent to apply the Act against Arab countries conducting anti-Israel boycotts. Therefore, they advise against placing South Africa on the list.

The question for us is whether this statute, in its application to South Africa, could be added to the South African “hit list” as yet another option available to the President for action if and when appropriate. I am inclined against this strategy because of the uncertainty of its holding up in court,² because other measures spelled out on the hit list are more certain of application, because of the fairly loud splash among US corporate interests that such a designation would make, and because of the relatively harsh signal that would be sent to South Africa at this, an inappropriate, time. Deal concurs in this reasoning.

Therefore, unless you object, I intend to inform Treasury by phone tomorrow (August 31) that it would be preferable were South Africa not placed on the list.³ I am also requesting a more complete written legal opinion on this matter from State.⁴ Since the list is reviewed quarterly, and since the inclusion or exclusion of a particular country is not binding as a precedent from quarter to quarter, there will be opportunity to review this issue if necessary.⁵

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 70, South Africa: 7–8/77. Confidential. Sent for information. A copy was sent to Tim Deal of the NSC Staff.
2. Aaron underlined this sentence up to “court,” and wrote in the left-hand margin: “Just as well.”
3. Aaron underlined “that it would be preferable were South Africa not placed on the list,” and drew a line connecting the sentence to his note below: “let’s finesse it for a while keep the option open and on our own private ‘hit’ list!!”
4. Aaron underlined “requesting a more complete written legal opinion on this matter from State,” and drew a line connecting the sentence to his note below: “use this excuse to keep it open.”
5. Aaron wrote “No” in the left-hand margin next to this paragraph.