Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

81. Memorandum From the Executive Secretary of the Cabinet Council on Food and Agriculture (McClaughry) to the Members of the Cabinet Council on Food and Agriculture¹

Washington, February 23, 1982

• RE: Minutes of Meeting of February 23, 1982

Issue

• Agricultural Export Policy (CM 204)

PRESENT

• The President
• The Secretary of State
• The Secretary of Defense
• The Secretary of Agriculture
• The Secretary of Labor
• The Secretary of Health and Human Services
• The Secretary of Transportation
• The Secretary of Energy
• The U.S. Trade Representative
• The Counselor to the President
• The Chief of Staff
• The Assistant to the President for Policy Development
• The Chairman, Council of Economic Advisers
• The Deputy Secretary of the Treasury
• The Deputy Secretary of Commerce
• John McClaughry, Executive Secretary
• Richard Lyng, Deputy Secretary of Agriculture
• Elizabeth Dole
• Craig Fuller
• Fred Khedouri
• William Clark
• Richard Darman
• Ken Duberstein
• Kenneth Cribb

Secretary Block asked that the President recognize the importance of making a firm and clear statement to allay fears in the farm community and among foreign farm product buyers that the U.S. might not be a reliable trading partner. He asked Deputy Secretary Lyng to present the Department’s views in greater detail.

Deputy Secretary Lyng presented charts² showing the alarming decline in the price of major commodities, and noted that expected bumper crops this year would cause continued low prices and depressed farm incomes. He said that in these circumstances rumors of a possible interruption of opportunities to market commodities internationally were taken very seriously by farmers. Forty percent of U.S. crop acreage is now devoted to export crops, and in FY81 food exports produced a $26 B contribution to the nation’s balance of payments situation.

Mr. Lyng said that farmers traditionally feel that Washington doesn’t understand farm problems, and they continually urge farm members of Congress to push Administrations into greater awareness. The House Agriculture Committee will hold a hearing on agricultural export policy on March 9.³ He said we needed a powerful statement on the foreign sales issue to allay fears of a new embargo, a statement he would like to have called “the Reagan Doctrine”.⁴ The three points of such a doctrine would be:

1) No restrictions would be imposed on the exportation of farm products because of rising domestic prices.

2) Farm exports will not be used as an instrument of foreign policy except in the most extreme situations and as a part of a total embargo. We will not interrupt exports to any nations except under conditions where a severe threat to this Nation’s security is involved.

3) Foreign markets must be kept free of unreasonable trade barriers and unfair trade practices.

Secretary Block noted that this is largely a restatement of existing Presidential policy, but that packaging and announcing it properly would quite possibly make it national policy even after this Administration leaves office.⁵ He said this statement would be very good news for the farm community and would be extremely well received. American agriculture does not want to be a subsidized ward of the government; it can compete in world markets, given a fair opportunity, without trade barriers and without threat of interruption.

Secretary Haig stated that unilateral grain embargoes are self defeating. The Export Administration Act, however, affords the President sufficient authority, with sufficient ambiguities, to use an embargo flexibly in case of a severe foreign policy crisis.⁶ If a statement were made to afford some special exemption to agricultural products, the President would be saddling himself with a “mini-Clark Amendment” [prohibition of aid to Angolan rebels].⁷ The Secretary noted that his recent conversations with Soviet leaders showed that the Soviets are deeply worried about the Polish situation, and that a new grain embargo would be a “terrible problem” for them. The AFL CIO would be upset at exempting agriculture from any embargo; it would be seen as a special deal for farmers.

Ambassador Brock agreed with points 1 and 3 of the proposed statement, which he said was “basic Republicanism”. He noted that point 2 essentially restated the President’s campaign position. We do need to state that restraints on exports will never be used to undercut domestic prices, but point 1 should not be singled out. There is still a “hangover problem” from the Carter embargo.

Secretary Lewis suggested modifying point 2, but Secretary Haig argued that the President should not make a statement at all. The tensions over Poland are at a peak; such a statement would appear to be a softening of the President’s position. A broad free trade statement, reiterating the President’s remarks at Ottawa,⁸ would be appropriate, especially in view of trade barrier controversies with the European Community and Japan. All such issues should be raised at the forthcoming Economic Summit,⁹ but he questioned the wisdom and timing of such a statement.

Secretary Weinberger said such a statement would send an unfortunate signal to the Soviets just as the Siberian pipeline deal is being decided. It would hurt our Allies, but not the U.S., giving rise to Allied suspicions that we want them to sacrifice on the natural gas issue, while we are unwilling to face some sacrifice on farm exports. He noted that AFL CIO President Kirkland had told him that in case of a Polish invasion, he (Kirkland) could probably not restrain a work stoppage at shipping facilities—and probably wouldn’t want to; so that a “no embargo” policy might not even be a practical option. He said that attempting to define a rigid policy for the future involved making a definition of when to impose it; this would tend to tie the President’s hands like the Clark Amendment. The statement wouldn’t do much good and could do some real harm. The best policy would be to issue no statement at this time, especially if there is really nothing new in it.

Ambassador Brock reminded the Council that Congress, in the 1981 Farm Bill, had provided that in the event of a grain embargo the government would be obliged to offer crop loans at 100% of parity.¹⁰ This would mean on the order of a $30 B outlay for CCC. This is a very powerful deterrent to an embargo of farm products only. If national security is at stake, any embargo ought to be across the board in any case.

The President suggested dropping the adjective “farm” from point 2, so that it covered all exports. Mr. Meese noted that doing so would appear to go further than present policy, and that there was no good reason for doing so at this time.

Deputy Secretary McNamar said the timing was inauspicious for such a statement; that the Buckley mission was on its way to the EC,¹¹ and reiterating our unwillingness to suffer a grain embargo would undercut their negotiating position. He agreed with Secretary Weinberger’s points about inflexibility, and suggested that points 1 and 3, but not 2, be made in Presidential speeches as occasions arose.

Secretary Haig said that the prefatory statements in the draft would hinder our ability to influence the EC, and also would put the USSR on notice that we are reluctant to sacrifice. He said an agricultural export policy paper should be far broader, going into considerable detail about export promotion and trade barriers. He agreed with Secretary Block that there was actually nothing new in the proposed statement, and that a low-level acknowledgement of that fact via a press room statement would not be damaging.

Mr. Weidenbaum noted that merely deleting “farm” from point 2 would leave the prefatory remarks and the action points inconsistent; the former focuses on agricultural exports, while the latter, as amended, would be speaking of exports generally.

Secretary Lewis said the narrowness of the issue is not the problem; the problem is to help the Secretary of Agriculture calm an important sector of the economy. The President suggested that perhaps paragraph 3 of the preface and point 2 could be deleted, but Secretary Block pointed out that the subject of point 2 could not be ignored. Dr. Anderson said that it seemed to him that the farm community wanted an iron clad guarantee against an embargo, which was more than they really had a right to expect in view of possible national security considerations.

The President recollected that a farmer had spoken to him following the February 18 press conference statement, and had been very reassured on the embargo question. He thus saw the value of continued reassurance.¹²

Mr. Darman pointed out a dilemma: if point 2 is designed to satisfy farmers, it brings us up short in dealing with the Polish problem; if it is amended to refer to all exports, then it simply isn’t true, in light of existing restrictions on high technology exports to the Eastern Bloc. The President suggested that perhaps point 2 could be concluded after “extreme situation”. Secretary Haig reiterated his view that to say anything of value to the farm community, foreign policy flexibility would necessarily be compromised. Mr. McNamar observed that singling out one sector would lead to appeals for equal treatment from other sectors of the economy.

Secretary Block then suggested substituting the President’s actual February 18 news conference statement for point 2. Secretary Haig said that there was a considerable difference between the President replying to a question at a news conference, and issuing a major policy statement on the issue.

Mr. Meese suggested that point 2 be rewritten to say: “The United States will be a reliable supplier of agricultural exports and will not treat agricultural products selectively or apart from other export items in regard to matters of our national security interests.” Secretary Haig was not convinced. He inquired what we gained by making such a statement.

Mrs. Dole said that farm groups were very concerned about this issue, and that the substance of these policies should be incorporated in the President’s remarks for farm editors, scheduled for late in March.¹³ Secretary Haig agreed. Mr. Lyng said that earlier action would be desirable; that Congress could well pass a joint resolution on the subject before then. Secretary Block supported the speech idea, saying it would get very big attention in farm areas and would be a big plus for the President. Mr. McNamar suggested that it should be held off until the Buckley mission gets home from Europe.

Deputy Secretary Wright said that farm policy should be addressed in the overall context of trade policy generally. Mr. Meese said this statement should be headed “agriculture policy”, not “agricultural export policy”. He suggested using the three points, as amended, for Congressional talking points and as the body of the farm editors speech. Secretary Haig agreed. It appeared that consensus was achieved on this recommendation.

1. Source: Reagan Library, C.W. Burleigh Leonard Files, Cabinet Council on Food and Agriculture Minutes, 02/23/1982–12/17/1982 (1). No classification marking. All brackets are in the original. No drafting information appears on the minutes; presumably drafted by McClaughry. McClaughry sent the memorandum to the members of the Council under a February 26 covering memorandum. (Ibid.)
2. Not found.
3. See General Agricultural Export and Trade Situation: Hearing Before the Committee on Agriculture, House of Representatives, Ninety-Seventh Congress, Second Session, March 9, 1982, Serial No. 97–HHH (Washington: Government Printing Office, 1982).
4. Attached but not printed is the February 9 Department of Agriculture draft statement entitled, “The Reagan Doctrine: Establishing A Long Term National Policy of Agricultural Exports.”
5. Reference is to a statement Reagan made at his February 18 news conference; a typewritten excerpt from the news conference is attached but not printed. The President, in response to questions regarding his support for a “market-oriented agricultural policy” and the imposition of grain embargoes in Poland or in other countries, stated: “I have repeatedly said that the only way I would consider a grain embargo would be as a part of an across-the-board embargo, that we will not again make what I thought was a mistake earlier and penalize one sector of our industry, the famers, by just using that as an embargo item. So, we will not do that.” He added that he was “very sympathetic to the agricultural industry, because I don’t know of any industry that’s been harder hit by the cost-price squeeze than the American farmer. And we’re doing everything we can to stimulate foreign markets for them.” (Public Papers: Reagan, 1982, Book I, p. 185)
6. Reference is to the Export Administration Act of 1979 (P.L. 96–72; 93 Stat. 503), which Carter signed into law on September 29, 1979. The act permitted the President to control exports for various reasons, including for foreign policy.
7. Reference is to the Clark amendment to the 1976 security assistance bill. Proposed by then-Senator Dick Clark (D–Iowa) on December 15, 1975, the amendment prohibited any assistance to military or paramilitary operations in Angola, except under specified conditions. The bill was passed with the Clark amendment on June 25, 1976, and Ford signed the International Security Assistance and Arms Export Control Act (P.L. 94–329; 90 Stat. 729) into law on June 30.
8. See Document 57.
9. See footnote 6, Document 74.
10. Reference is to the Agriculture and Food Act of 1981 (S. 884; P.L. 97–98; 95 Stat. 1213); see footnote 13, Document 66. The act included “a clause that could inhibit Mr. Reagan’s use of food as a diplomatic weapon. This section would require him either to embargo all American products or to pay farmers hefty subsidies if he blocked sales of only grain to any country.” (Seth S. King, “Farm Bill Wins in a Close Vote,” New York Times, December 17, 1981, p. B15)
11. Reference is to Buckley’s planned five-nation tour of Western Europe in order to discuss economic policy, March 13–20. Olmer, Iklé, Leland, and Bailey were scheduled to accompany Buckley to Bonn, Paris, London, Rome, and Brussels. Under cover of a March 24 memorandum, Bremer sent a copy of the mission’s final report to Clark. (Reagan Library, Executive Secretariat, NSC Trip File, Summit File; NLR–755–13–2–6–1) Buckley provided a debrief of his March trip to the President, Haig, and other senior administration officials on March 25; for the memorandum of conversation, see Foreign Relations, 1981–1988, vol. III, Soviet Union, January 1981–January 1983, Document 152.
12. See footnote 5, above.
13. The President offered remarks on agricultural policy to representatives of agricultural publications and organizations on March 22 at 3:18 p.m. in the Old Executive Office Building. Reagan outlined the “long-term policy on farm exports,” asserting: “Now I announce this policy with a great sense of pride—the pride in the accomplishments of U.S. farm families. Adherence to this policy will bring them deserved credits and add to the prosperity of all Americans and enhance the cause of peace throughout the world.” (Public Papers: Reagan, 1982, Book I, p. 349)