Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

55. Memorandum From the Secretary of State to the President’s Administrative Assistant (Hauge)¹

Washington, December 30, 1955.

SUBJECT

• Comments on the Agriculture Department Proposal for Section 22 Action on Extra Long Staple Cotton (Reference your memorandum of December 19²)

The Action proposed by Agriculture³ would be particularly unfortunate at this time when the Administration is reviewing the overall cotton problem and we are trying to develop more favorable relations with Egypt. It would also adversely affect our relations with Peru.

We have been striving to build up good will with Egypt in an effort to counteract Soviet pressures in the area, to influence the settling of the Arab-Israel dispute, and in view of Egypt’s position of leadership among the Arab States. Our efforts would be gravely prejudiced by action to restrict imports of their cotton.

If we restrict the ability of Egypt to sell cotton here, it will increase the need for Egypt to sell elsewhere. Cotton represents 85 per cent of Egypt’s exports and is its major dollar earner. Egypt exports about $16 million of cotton to the U.S. annually, half of which would be lost under the Agriculture proposal. Egypt has increased its cotton exports to the Soviet Bloc recently because its traditional free world markets have reduced their cotton imports. We believe, therefore, that the proposed action would markedly increase the orientation of Egypt toward the Soviet Bloc.

The importance of Egypt, in relation to mid-eastern oil, and Africa, needs, I think, no elaboration here.

Peru has been concerned for years over the fact that her two principal exports, cotton and sugar, are subject to quota limitations upon entry into the U.S. Peru exports considerably less to the U.S. than it imports from us and attributes this “unfavorable” balance to our restrictive trade policies.

Any action which the Administration takes on long staple cotton should be considered within the framework of the overall cotton problem. I understand that the proposal might reduce CCC outlays by about $12 million as compared with the $1.5 billion of upland cotton in CCC’s hands. I should hope that the long staple cotton problem could be solved in a different direction.

John Foster Dulles⁴

1. Source: Department of State, Central Files, 411.0041/12–3055. Confidential. Drafted by Nehmer and Radius.
2. Not found in Department of State files.
3. See Document 51.
4. Printed from a copy which bears this stamped signature.