2. Memorandum From Secretary of State Haig to President Reagan 1

SUBJECT

  • Recommendation to Congress for Extension of Jackson-Vanik Waiver Authority

The Jackson-Vanik waivers for Romania, Hungary, and the People’s Republic of China, and the three related trade agreements2 establishing nondiscriminatory (“MFN”) trade treatment, are important elements in our overall relations towards Eastern Europe and the People’s Republic of China. Section 402 of the Trade Act of 19743 prohibits the granting of most favored nation treatment, or of government financing or credits, or the conclusion of trade agreements, with any nonmarket economy country which imposes restrictions on emigration. The Jackson-Vanik Amendment authorizes the President to waive these prohibitions if he determines that waivers will promote the objective of freer emigration from the country concerned and if he receives appropriate assurances from that country. The Trade Act requires that you recommend to Congress each year that this waiver authority be continued.4

Section 402 (d) (5) of the Trade Act of 1974 requires that you recommend extension of your waiver authority to Congress by June 3. If you do not, the existing waivers for Romania, Hungary and the People’s Republic of China (PRC), and your authority to extend MFN to those countries will lapse and our trade agreements will have to be suspended.

Our trade agreements with the PRC, Hungary and Romania have encouraged an enormous expansion of trade, which has been particularly beneficial to U.S. exporters. The agreements have also helped us to obtain better treatment for U.S. businessmen and have facilitated the handling of the relatively few trade disputes which have arisen.

Perhaps most importantly, these three accords, together with eligibility for MFN, are the most important elements of our overall relations with the PRC, Hungary and Romania. A termination of MFN eligibility [Page 5] for any of these countries would be a serious setback in our bilateral relationship without any resultant benefit for the U.S.

In response to your recommendation, either House of Congress may terminate either the general waiver authority or particular waivers. We anticipate some Congressional opposition to your recommendation, particularly concerning Romania. In spite of an increase in emigration from Romania, there is some sentiment in Congress that the overall human rights situation there does not merit continuation of MFN. We do not expect significant opposition with regard to China, although there may be some Congressional concern over growth in imports from China in import sensitive industries. We do not presently expect that Congress will block waiver authority extension for any of the countries concerned.

As required by the Trade Act, the attached draft Recommendation to Congress explains the value of the Jackson-Vanik waiver authority in our economic and political relations with Eastern Europe and the PRC. It also explains the reasons for determining that continuation of the three existing waivers will promote the objective of freer emigration from Romania, Hungary and the PRC.

Recommendation:

That you execute the attached Determination, approve the attached Recommendation for Extension of Waiver Authority, and transmit both documents to Congress before June 3.5

Attachment

Paper Prepared in the Department of State6

RECOMMENDATION FOR EXTENSION OF WAIVER AUTHORITY

I recommend to the Congress that the waiver authority granted by subsection 402(c) of the Trade Act of 1974 (hereinafter “the Act”) be further extended for twelve months. Pursuant to subsection 402(d)(5) of the Act, I have today determined that further extension of such [Page 6] authority, and continuation of the waivers currently applicable to the Socialist Republic of Romania, the Hungarian People’s Republic, and the People’s Republic of China will substantially promote the objectives of section 402 of the Act. My determination is attached to this Recommendation and is incorporated herein.

The general waiver authority conferred by section 402(c) of the Act is an important means for the strengthening of mutually beneficial relations between the United States and certain countries of Eastern Europe and the People’s Republic of China. The waiver authority has permitted us to conclude and maintain in force bilateral trade agreements with Romania, Hungary, and the People’s Republic of China. These agreements are fundamental elements in our political and economic relations with those countries, including our important productive exchanges on human rights and emigration matters. Moreover, continuation of the waiver authority might permit future expansion of our bilateral relations with other countries now subject to subsection 402(a) and (b) of the Act, should circumstances permit. I believe that these considerations clearly warrant this recommendation for expansion of the general waiver authority.

I also believe that continuing the current waivers applicable to Romania, Hungary and the People’s Republic of China will substantially promote the objectives of section 402 of the Act.

Romania—Emigration from Romania to the United States has increased substantially since the waiver has been in effect. In 1980, more than 2,800 persons emigrated from Romania to the United States. This is nearly seven times the pre-MFN level of emigration and almost twice the 1979 level. Continuation of the waiver will also contribute to maintaining a framework for dialogue with the Romanian Government on emigration procedures, emigration to Israel, binational marriages, and other humanitarian problems.

Hungary—In March 1978 the Hungarian Government stressed to the U.S. Government that it intended to deal with emigration matters in a responsible and humanitarian way. Since that time the actions of Hungarian authorities have been consistent with this policy. A large majority of Hungarians seeking to emigrate are able to do so without undue difficulty. Very few problem cases arise, and U.S. officials are able to discuss these constructively with the Hungarian Government. Most problem cases ultimately are favorably resolved.

People’s Republic of China—During the past year, China has continued its commitment to open emigration, exemplified by its undertaking in the September 1980 U.S.-China Consular Convention to facilitate family reunification. Our posts in China issued over 3,400 immigrant visas in FY–1980, and over 12,800 nonimmigrant visas for business, [Page 7] study and family visits. More than 5,000 Chinese now have come to the United States since 1979 for long term study and research. As has been the case for the past several years, the numerical limits imposed on entry to the U.S. by our immigration law continue to be a more significant impediment to immigration from China than Chinese Government exit controls. The Chinese Government is aware of our interest in open emigration, and extension of the waiver will encourage the Chinese to maintain its present travel and emigration policies.

In light of these considerations, I have determined that continuation of the waivers applicable to Romania, Hungary, and the People’s Republic of China will substantially promote the objectives of section 402 of the Act.

  1. Source: Reagan Library, William L. Stearman Files, Subject File, Romania 06/02/1981–06/21/1981. Confidential.
  2. The trade agreement with Romania was signed on April 3, 1975, and entered into force on August 3, 1975. The agreement with Hungary was signed on April 7, 1978, and entered into force on July 7. (29 UST 2711) The agreement with the People’s Republic of China was signed on July 7, 1979, and entered into force on February 1, 1980. (31 UST 4651).
  3. P.L. 93–618.
  4. President Ford signed the 1974 Trade Act with the Jackson-Vanik Amendment (Section 402 of P.L. 93–618) on January 3, 1975. Documentation is in Foreign Relations, 1969–1976, vol. XVI, Soviet Union, August 1974–December 1976.
  5. The recommendation was neither approved or disapproved. A transmittal message and a Presidential Determination are attached but not printed. The message transmitted the recommendation for the waiver and Presidential Determination 81–8 to Congress on June 2, See Public Papers: Reagan, 1981, pp. 478–479.
  6. No classification marking.