SENIOR INTERDEPARTMENTAL GROUP-INTERNATIONAL ECONOMIC POLICY 2:00 P.M. JANUARY 27, 1983 INDIAN TREATY ROOM (ROOM 474, OEOB)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R000400590056-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: February 26, 2010
• Sequence Number: 56
• Publication Date: January 27, 1983
• Content Type: REPORT

Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
USTR review
completed.
(~ J EXCWt~~@ ~QCje,~l~
J ! i9A~ JOI_
NSC review
completed.
Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
 Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
CONFIDENTIAL
SEIvIOR INTE2DEPAR'1Z~IENTAL GROUP-INTERNP_TIONAL ECONObIIC POLICY
2:00 p.m.
January 27, 1983
Indian Treaty Room (F.oom 474, OEOB)
ireas~ary
Sec=~=ary Regan
:Iarc Leland
ores
Dr. Alton Keel
Sta `a
Sec. ~ teary Shultz
W. ..Llen G?allis
Defer~~e
Fred C. Ikle
Stephen Bryen
Agriculture
Richard E. Lyng
Seeley G. Lodwic'c
Commerce
Secretary Ba 1dr ige
Olin [v=thing ton
Lionel fi. Olmer
USTR
Pmb. ~?illiam Brock
CIA
Henry 2owen
P~Iaurice Ernst
OPD
Edwin L. Harper
Roger B. Forter
is SC
FIenry T?au
r:orman Eai ley,
Executive Secretary
C E~~
G^illiam r_'isk.anen
The Chairman called on Deputy Secretary Lyng to give the
SIG-I~r an update on the issue of butter export. fir. Lyng
reported that since the SIG-IEP had not been enthusiastic
about a butter for strategic materials barter deal ctiith the
Soviet Union, the USDA has explored other options for selling
the butter. One option is to sell some 50,000 metric tons of
butter to the Irish Dairy &oard with an option to purchase
another 50,000. Nest, if not all, of the 100,000 metric tons
of butter would go to the Soviet Union. Restrictions on
export destinations would not be acceptable to the ID).
F_nother option would be to sell Lo the Pew Zealand Dairy ?oard
eit:~er with or without restrictions on sale to the USSP..
Some participants argued that cae should not sell subsidized
butter to the Soviet Union. This would ge against credit
rrinciples we have established in the East-E~'est economic field
with our Allies. Others noted that if we fail to put.. this
CONE IDEN'i IAL
DECLASSIFF ON: OADR
~ ~ ~--3 ~-
Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
 Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
CONF IDENTIP.L 2
butter into world markets, then EC countries, particularly
France, are likely to make. the sales, and unsold U.S, butter
will continue to spoil.
ambassador Brock stressed the importance of consultations with
the EC in the event that we choose to sell either to the Irish
or :+ew Zealand dairy boards.
The Chairman concluded the discussion by suggesting that USDA
ex:_ore whether New Zealand would be interested in purchasir_g
ti:e b:~tter. If there is interest, then we can put the
recc--W endation to the President. NSC, State and Defense
ar;'~~3 against any significant subsidized butter sales at this
ti:~ ~~hich might ultimately be used in the Soviet Union. In
the event that the butter must be sold, then the lesser of
evils would be sales to New F,ealand.
Given the problem of timing (France may move to sell more
butter by the end of the month and thus preclude any U,S.
sales), it is not expected that the SIG-IEP will have another
o~~portunity to discuss this issue. The Chairman called on
USDA to explore a sale with iJew Zealand and then, in coordination
with ~iorman Bailey, to prepare a decision memorandum for the
President. ~i~his memorandum should be circulated among SIG-IEP
:ne;:~bers for comments before it goes to the President.
Blended Credits
On January 11, President Reagan announced a blend e3 credit
~roeram of $250 million direct credit and at least $1 billion
in CCC export credit guarantees. USDA has received and
analyzed many proposals for use of these funds. The Chairman
urged that the blended credits be reviewed at staff level by
the rational Advisory Council (NAC). If differences arise,
when these issues should be discussed by the SIG-IEP.
::heat Flour
The recent U . S. -I;c~yptian flour agreement has raised some
European concern because the newly proposed U.S, flour sale
will dis~olace EC flour in the Egyptian market. The Europeans
-iay take this issue to the GATT. Ambassador Brock noted that
they rill not have a good case against this sale.
Sale of Dairy Products to Egypt
Deputy Secretary Lyng gave a status report on U.S. efforts to
sell butter for local currency to Egypt. The dairy products
would be made available in Egypt to needy families through
private grocers and government food stores at subsidized prices
and therefore would not displace commercial sales by New Zealand.
CO~:F IJEii i IAL
Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
 Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6
CONFIDENTIAL 3
The Chairman requested that all issues relating to agricultural
exports where subsidies are involved should be cleared throuc;h
the `SAC or at a staff-level IG composed of all member agencies
of SIG-IEP and if there is a disagreement by any agency, the
issue should be brought to the SIG.
Japanese Automobile Export Restraints
The government of Japan must decide by March 31 whether to
ext ~ ~ their current auto export restraint to the United
Sta~~s for a third year. The U.S. auto industry is calling
for `~e extension of the restraint through i~iarch 31, 1985 (a
th i=:~ and f our th year) .
she SIG--IEP members were sympathetic to a two year extension.
Ambassador Brock, however, noted that we are likely to have
con~inuing problems unless substantial Japanese investment in
the U_S. industry is forthcoming.
Alaskan Oil Export
The Chair*:~an called on Under Secretary Wallis to give an
update on Alaskan oil exports. ~1ew circumstances--such as
large finds in the Beaufort Sea and a glut in California
markets--may suggest that now is an opportune time to lift
the restrictions on U.S. oil export to Japan. However, we
face a challenge in getting the Congress to amend the
legislation. Ambassador P4ansf field has been taking the
temperature of key members of Congress and will report to
l~llen :~a11is his findings. The Chairman urged bir. Wallis'
enery-y security group to continue its study of this issue and
to develop options for consideration b_v the SIG-IEP so that
the President can take a decision on this issue in the near
future.
iiie Chairman then noted the President's initiative with Prime
:linister `:akasone to establish a U.S.-Japan Energy 6~7orking
Group. He asked idorman Bailey to produce a paper describing
the origins of this idea, proposed terms of reference,
participation, schedule of meetings, etc. and report back to
t~Ze SIG-IEP.
Sanitized Copy Approved for Release 2010/02/26 :CIA-RDP85M00364R000400590056-6