MINUTES ECONCOMIC POLICY COUNCIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01117R000602130002-7
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 2
• Publication Date: February 10, 1986
• Content Type: MISC

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CONFDIAL
MINUTES
ECONOMIC POLICY COUNCIL
February 10, 1986
11:15 a.m.
Roosevelt Room
Attendees: Messrs. Baker, Block, Baldrige, Brock, Yeutter,
Sprinkel, Whitfield, Burnley, Wright, McAllister,
Amstutz, Brown, Burns, Davis, Danzansky, Driggs,
Gray, Hoffman, McMinn, Mulford, Smart, Stucky, and
Wallis, and Ms. Risque.
1. Report of the Working Group on Sugar
Secretary Baker proposed that the Economic Policy Council
consider recommending to the President that the Administration
rely on textile initiatives and in-kind commodity assistance to
mitigate the harmful effects of the quota reduction on the CBI
countries. Ambassador Yeutter stated that the CBI textile
initiative, to be presented to the President next week, would
prompt additional growth of up to $150 million a year in the CBI
countries, exceeding the $102.5 million loss attributable to the
reduction in the sugar quota. Several Council members noted that
the Australians are the most efficient sugar producers in the
world and that reallocating quotas would harm them and encourage
the CBI countries to continue to invest in sugar production, a
sector in which they are less efficient than other parts of the
world. The Council unanimously agreed to recommend to the
President that he assist the CBI countries through the proposed
textile initiative and the in-kind commodity assistance proposal.
Mr. Amstutz stated that the Working Group on Sugar had developed
four options for reforming the sugar program:
1. Propose legislation repealing the "no forfeiture" provision
of the domestic sugar program;
2. Reintroduce our 1985 Farm Bill proposal to gradually reduce
the sugar loan rates;
3. Propose legislation basing the loan rate on market prices;
and
4. Propose legislation controlling domestic sugar supplies.
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Minutes
Economic Policy Council
February 10, 1986
Page two
He stated that option one was the most practical, option three
the most philosophically attractive, and option four the most
radical, representing a shift in the sugar program toward the
tobacco program.
Secretary Block stated that Congress is most likely to enact
option four, although he would not support it. Ambassador
Yeutter suggested that only options two and three are viable from
the Administration's viewpoint, and that option two, our previous
proposal, was the more logical proposal to send to Congress.
Decision
The Council unanimously agreed to recommend to the President that
the Administration adopt option two, reintroduce our 1985 Farm
Bill proposal to gradually reduce the sugar loan rate.
2. The Export Enhancement Program
Mr. Amstutz stated that the 1985 Farm Bill mandates that the
Administration use all of the $2 billion Export Enhancement
Program, as evenly spread out over fiscal years 1986-88 as
possible. He noted that when the Administration agreed to adopt
the Export Enhancement Program last May in an effort to achieve a
budget resolution we could support, we agreed to use up to $2
billion.
Mr. Amstutz stated that the Economic Policy Council established
six criteria for administering the Export Enhancement Program,
three of which were published, and three which were not. The
three published criteria are:
1. There must be additionality;
2. The subsidies must be targeted; and
3. The program must be budget neutral.
The three unpublished criteria are:
1. Debtor nations, such as Brazil and Argentina, must be
protected;
2. The Soviet Union and Soviet Bloc countries must not receive
subsidies; and
3. Non-subsidizing exporters, such as Australia and Canada,
must not be affected.
TENTIAL
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Minutes
Economic Policy Council
February 10, 1986
Page three
Mr. Amstutz stated that Congress was not satisfied with the pace
of the program under these criteria and made the complete
expenditure of the $2 billion program mandatory. He explained
that in following the law, USDA must implement across-the-board
subsidies, including the Soviet Union and affecting
non-subsidizing exporters. He stated that the TPRG had developed
two options for the Council's consideration:
1. Amend the 1985 Farm Bill to make the program discretionary;
and
2. Stretch out the length of the program from 3 to 5 years.
The Council discussed a number of issues, including the
Administration's strong opposition to subsidizing the Soviet
Union. Mr. Amstutz stated that he tried to persuade the Congress
to include a reservation about national security considerations
in the Farm Bill but was rebuffed. Several members of the
Council suggested that the root of the problem is the EC's policy
of subsidizing agricultural exports.
Secretary Baker suggested that the Administration might seek to
incorporate the current criteria guiding our administration of
the program into law. Secretary Block suggested that rather than
specify the Soviet Union or Soviet Bloc countries as ineligible
for subsidies, the legislative proposal simply state that non-MFN
nations are ineligible for subsidies.
Decision
The Council unanimously agreed to recommend to the President that
the Administration seek legislation incorporating the six
criteria under which the program is now operating into law.
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