LETTER TO THE HONORABLE R. T. MCNAMARA FROM WILLIAM J. CASEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88B00443R001500070042-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 20, 2016
• Document Release Date: August 27, 2007
• Sequence Number: 42
• Publication Date: May 14, 1984
• Content Type: LETTER

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The Director of Central Intcllii encc
WaJiinI9(m.I) C 20505
14 May 1984
The Honorable R. T. McNamar
Deputy Secretary of the Treasury
Washington, D. C. 20220
Dear Tim,
I talked to Don on the phone on Friday on this
and I understand it was taken up with you today
through
Yours,
William J. Casey
Distribution with Enclosure by ES/ER
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c-~-- DCI
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Executive Registry
84- 2201
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The Director of Central Intelli once
Wa910tdun.1) C. 20505
14 May 1984
The Honorable Donald T. Regan
Secretary of the Treasury
Washington, D. C. 20220
Dear Don,
After our telephone conversation on Friday, I asked to see the evidence
on the production and export of goods manufactured by convict, forced or
indentured labor in the Soviet Union. As I suspected, the evidence is
fragmentary and not very specific.
Also, on reflection I don't see that it does more than defer potential
embarrassment from inadequate evidence for Treasury and Customs to prohibit
importation and then to leave it up to the importers to certify that the
item was not produced.'through the use of forced labor. I am also impressed
by the State Department argument that to take, this step now tiiould be seen as
a skimpy reaction to,the Soviet Olympic decision.
I.send along for your information two memoranda outlining the potential
impact of this step on the CIA and the rest of the government. According to
the State Department memorandum, the issuance of a preliminary finding would
be based on a memorandum of 7 November 1983, sent by National
Intelligence Officer for Economics at CIA,- to the Commissioner of Customs.
That memorandum states that the evidence is too sketchy,to permit . calculat.i.on,.;
of what ..proportion.of-total--Soviet' production"ofthe'items listed is provided
by forced laborers. It goes on to say that only 3 percent of the total Soviet,
labor is forced, so that it appears that only in rare instances does production
by forced labor comprise a large share of total output of any given product.
Also, 93 percent of the entries in the list refer to production before 1981,
5 percent do not give a date, and only 2 percent refer to production after 1980.
I don't want CIA to come under pressure to prove something with sketchy
evidence or disclose our information sources, and I urge that all the impli-
cations of this step be carefully considered before moving on it.
Yours,
Wi PiamJ. Casey
P.S. I tried to get you on the phone today on this but couldn't reach you,
so I asked Tim McNamar to add these further concerns since we talked on Friday.
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The President has set the decision deadline for moving ahead
with the ban on products allegedly made with Soviet forced labor
for Tuesday, May 15. The NSC staff's decision memorandum for
the President was sent to Bud McFarlane yesterday supporting our
position on both substance and timing, and with our points
attached. Agriculture, USTR, and Commerce are all sending
memoranda to the President supporting our position. We expect
Senators Dole and Percy to weigh in, hopefully with the
President. Since Treasury is basing its case in large part on
information provided by CIA and State, which both agencies have
stated in writing is not sufficiently specific, you may wish to
enlist Bill Casey's support .
--We are about to have an unwarranted dust-up on the forced
labor question., Treasury will proceed with the ban next Tuesday
unless we can stop them.
--CIA will be directly involved; Treasury is contending that
a CIA memo of November 7, 1983, justifies the ban on five
products.
--That study, however, states: "we have very little direct
evidence that prison-made goods are exported." Further, it says
the evidence is "too sketchy" to calculate the percentage of
total Soviet production of the items to be banned provided by
forced labor. And the memo cites only two reports that refer
to goods produced in camps for export (and those not
specifically to the US); both date from before 1976.
--If the ban is approved, CIA evidence will be subjected to
great public scrutiny after the fact. You will be in the public
dock to provide concrete proof to support the ban. This case
may even go to court.
--In order to avoid this, you may wish to inform the
President that, in your judgment, the evidence provided to
Treasury by CIA does not justify this step.
--We think the best approach is to wait until the ongoing
ITC investigation of forced labor practices worldwide is
completed at the end of this year.
--The forced labor ban, even if not announced until May 15,
would he seen as a reaction to the Soviet Olympic decision.
This would undercut our efforts to take the high road with the
Soviets on this issue. It could remove some of the onus from
them for not responding positively to the President's proposals
for a constructive dialogue.
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-- The forced labor ban, even if not announced until May 15,
would be seen as a sanction in reaction to the Soviet Olympic
decision. This would undercut our efforts to take the high road
with the Soviets on this issue. It could remove some of the
onus from them for not responding positively to the President's
proposals, building on our demonstrated strength and realism,
for a constructive dialogue. While protecting our interests, we
must be careful not to play into the Soviet strategy of trying
to raise tension as we move into the elections.
-- The President would be made to look feckless with this
"sanction" since imports of only five types of goods would be
banned with no s-ignificant economic impact on the USSR.
-- The Administration has been forthright and realistic
about Soviet forced labor practices in its statements and
reports to Congress, and this is an integral part of our overall
policy approach to the Soviets. We will call a spade a spade,
and the Soviets will have to get used to it.
-- However, what we have before us is not a spade. While we
know a good deal about the overall picture, we don't know which
specific products made by forced labor are exported.
-- The law can be enforced only if we have specific
evidence. Such evidence is clearly lacking. CIA has only two
reports that refer to goods produced in camps for export (and
those not specifically to the U.S.) and both date from before
1976.
-- Moreover, Treasury's internal guidelines do not reveal
which standard of evidence it applied, making it impossible to
ensure consistent enforcement of this statute, and opening
ourselves to court challenges we could lose.
-- Banning these few items will have no measurable economic
impact on the Soviets, but the expected Soviet retaliation could
well involve the new grain agreement, which would be very
damaging to U.S. economic interests and to the President. The
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Soviets have already warned us that such a ban "could not help
but influence the atmosphere for Soviet grain purchase
decisions."
-- Farmers are already deeply concerned about agricultural
surpluses and export competition. Fears of the loss of the
Soviet grain market, which the Soviets can easily stoke, will
mean severe political damage to the President in the Farm Belt.
-- Unlike our ban on imports of Soviet nickel, we would have
no basis to negotiate away a forced labor-related import ban;
even a limited prohibition will be viewed as a serious
discriminatory act by the Soviets.
-- Our soundings indicate that Congressional support for
such a ban is very thin. And we are picking up growing
Congressional and farmer concern over the potential consequences
of such a ban for grain exports.
-- Partly for that reason, Senator Dole and the Senate
Finance Committee requested the International Trade Commission
to investigate forced labor practices wordwide. They are
holding public hearings in July and their report is due by the
end of this year. It would be inappropriate to act against the
USSR when other trade partners (the PRC and a number of our own
allies) may be using similar practices.
-- No action should be taken by Treasury on the Soviet
forced labor issue until the ITC investigation has been
completed. Treasury could cite the ITC study as the reason for
the delay. This would be consistent with the views of Senator
Dole who, in a letter to Secretary Regan on March 2, 1984,
pointed to the need for a consistent and comprehensive official
position on this issue, and stated his preference that a final
decision on the Soviet issue be deferred until the ITC report is
available.
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