Foreign Relations of the United States, 1977–1980, Volume XX, Eastern Europe

163. Memorandum From Secretary of State Vance to President Carter¹

Washington, March 22, 1978

SUBJECT

• Trade Agreement with Hungary

In Presidential Directive/NSC–21² you directed that, following return of the Crown of St. Stephen, the United States negotiate a trade agreement with Hungary provided that Hungary gives adequate emigration assurances. Since the Crown’s return we have obtained these assurances and have negotiated and signed a trade agreement which meets the requirements of the Trade Act of 1974.³ The Agreement must be approved by Congress.

The Trade Agreement

The agreement, which provides for reciprocal extension of most-favored-nation tariff status, will improve the competitive position of US exports to Hungary. It will also pave the way for the extension of Exim Bank and CCC credits and for increased sales of US goods. The agreement contains strong safeguards to protect US markets against sudden increases of imports from Hungary. STR, Commerce and Treasury participated actively in negotiation of the agreement. Agriculture and Labor have also approved the text.

Emigration Assurances

The assurances received from Hungary rest on several separate elements:

—our review of Hungarian emigration and more than a year of detailed discussions with Hungarian officials about their emigration law, practice and handling of individual problem cases;

—Hungary’s generally positive record on emigration; and

—a recent exchange of letters in which Hungary has confirmed the constructive nature of its future emigration policy (Tab 1).⁴

We have determined that, although Hungary’s emigration law is formally strict, its emigration practice is the most liberal in the Warsaw Pact. As a result in Hungary we have few divided family cases. Hungary’s laws, including that on emigration, do not discriminate against its Jewish population. See Tab 2 for further information.⁵

The Hungarians have agreed that the exchange of letters containing confirmation of their future emigration policy may be made public. I propose that you append these to the documents which you must submit to Congress for its approval of the agreement.

Congressional and Public Attitudes

Key Congressmen, including Jackson, Ribicoff, Javits, Vanik and Frenzel, and the Senate Finance and House Ways and Means staffs have reacted favorably to the agreement and the emigration assurances. We have encountered no opposition among Hungarian-American organizations, and the leaders of the American Jewish community have been positive.

Timing

Representative Vanik has urged that the Administration submit the agreement to Congress by the end of this month, in order to insure its consideration during this session.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 50, PD 6/77–4/78. Secret.
2. See Document 16.
3. In telegram 557 from Budapest, February 8, the Embassy reported the beginning of negotiations with the Hungarian Government on MFN and the initial meeting between the two negotiating teams. (National Archives, RG 59, Central Foreign Policy File, D780058–0974) On March 2, King reported to Brzezinski that the negotiations were successful and that the agreement would be signed in a matter of days. (Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 27, Hungary: 1/78–1/81)
4. Tab 1 is the exchange of letters between Hungarian Foreign Minister Puja and Ambassador Kaiser. See also footnotes 2–4, Document 162.
5. Not found. In telegram 4048 from Budapest, November 21, 1977, the Embassy reported the conclusions of airgrams A–70 and A–71 from Budapest detailing the Embassy’s understanding of Hungarian emigration law, policy, and practice. The Embassy concluded that the law was strict, but sufficiently flexible to allow the Hungarian Government to carry out a liberal emigration policy, that the U.S. Government had developed an effective method for handling family reunification problems, that prospective emigrants did not suffer from discrimination, and that emigration to Israel was not a problem. (National Archives, RG 59, Central Foreign Policy File, D770431–0262)