In the exchange of letters between the President and the Prime Minister of today's date, it was agreed that the United States Government would supply Trident II missiles to the United Kingdom. I am writing now to record our joint understanding on specific aspects of the agreed arrangements for the sale of the Trident II (D - 5) missile system and associated equipment.

It is understood that the Polaris sales agreement of 1963 and its implementing agreements will be the general pattern for the sale of the Trident II (D - 5) missile system.

It is agreed that the United Kingdom will pay a total contribution to research and development for the Trident II (D - 5) system equivalent to $116 million in Fiscal Year 1982 dollars, subject to actual payments being adjusted to reflect an agreed inflation index.

It is understood that the United Kingdom acknowledges that waiver by the United States of all charges (other than the administrative charge) in excess of $116 million will fully satisfy the requirement that the United States Government give defense assistance to the United Kingdom defense budget in return for manning by the United Kingdom of Rapier air defense of United States Air Force bases in the United Kingdom, and support and servicing for these Rapier systems. In addition it is understood that the United Kingdom will employ additional savings represented by the remainder of the United States waiver to reinforce its efforts to upgrade its conventional forces.

With respect to procurement of the Trident II (D - 5) weapon system, the Department of Defense is prepared to undertake, subject to compliance with United States law and national policy:

-- to permit United Kingdom manufacturers to compete on the same terms as United States firms for subcontracts for Trident II (D - 5) weapon system components for the program as a whole;

-- to ensure that Department of Defense procedures bearing on such competition for such Trident II (D - 5) weapon system components are consistent with this general principle; and

-- to designate appropriate United States staff in both countries to provide a point of contact for United Kingdom manufacturers, and to offer advice and briefing.

The United States attaches great importance to the maintenance by the United Kingdom Government of an independent nuclear deterrent. I am, therefore, pleased that it has been possible to reach this agreement between our two countries. I regard this arrangement as a significant contribution to the maintenance of stability and peace.

With warm regards,

Cap Weinberger

[The Honorable John Nott, Secretary of State, Ministry of Defence, Main Building, Whitehall, London SW1A 2HB, England]

B

Dear Cap,

Thank you for your letter of today's date dealing with specific aspects of the arrangements for the purchase by the United Kingdom Government of the Trident II (D - 5) missile system.

I confirm that my understanding of the agreed arrangements is in accord with that set out in your letter.

Our agreement on this is further evidence of the closeness of the co-operation between our two countries and is a matter of the greatest satisfaction to the United Kingdom Government.

Yours sincerely

John Nott

[The Honorable Caspar Weinberger]