The Minister of External Affairs of Australia has recently sent the Secretary
a memorandum on U.S. agricultural surplus disposal.2 Because it
sums up so well the attitude of Australia and other friendly exporting
nations towards our surplus disposal programs, I am taking the liberty of
sending you herewith a copy together with a copy of my reply.3 I am also enclosing a memorandum which
summarizes the Department of State’s position regarding the specific
objections raised by Australia.4
These objections have been raised before, both by the Australians and others,
but they have now become a source of considerable friction in our
international relations and we feel that the time has come for the
interested U.S. agencies to explore the possibilities of undertaking more
effective remedial action.
I should, therefore, very much appreciate receiving your views on these
matters, and any suggestions you might wish to make as to
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steps which could be taken to resolve the
problems which have been raised.5
[Enclosure]
7
Washington, April 30,
1957.
The Australians have long been dissatisfied with U.S. surplus disposal
practices and have registered numerous protests in cases where they
believe their interests have been affected. Similar representations have
been made by the Canadians, not only in the recent wheat talks but also
by the Prime Minister in a letter to President Eisenhower. In his reply the President
wrote, “I want you to know that it is the intention of all of us here to
reduce to a minimum the points at which our respective interests
diverge.”8
While the Australians tend to object to our disposal programs as a matter
of principle, even when injury to the Australian economy is slight,
there does appear to be considerable justification for some of the
points made, particularly the statements that consultation procedures
are inadequate and that the United States uses special disposal programs
to take advantage of fortuitous market opportunities to the exclusion of
other suppliers.
As the agency primarily concerned with foreign policy, the Department of
State must, of course, accept the primary responsibility for any
shortcomings in consultation procedures. In light of recent
developments, this Department feels that past practices leave something
to be desired. Consultation in the past has consisted largely of
informing friendly competitor nations of Title I agreements almost on
the eve of their signature when there was little possibility of altering
the programs, even if convincing arguments for so doing were advanced.
There has been no consultation on Section 402 programs. While the United
States must reserve to itself the final decision as to whether any
proposed program should be carried out, consultation with interested
friendly countries could round out our own thinking and provide a
desirable balance in our approach to disposal problems. Meaningful prior
consultation, moreover, could
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do much to improve our relations with other countries, regardless of
substantive changes in our disposal programs. We should like, therefore,
to work out with the other agencies concerned, particularly with the
Department of Agriculture and ICA,
consultation procedures that will substantially meet the desires of
other exporting countries on this point.
With regard to fortuitous market opportunities, it frequently develops
that a country that does not normally import a given agricultural
product is forced to do so because of crop failure or other reasons.
Similarly, a country that normally does import a given agricultural
product may find its import requirements increased substantially in any
one year. With rapidly growing populations, the incidence of such
fortuitous market opportunities will likely increase in the future.
There can, of course, be no valid objection to our entering such markets
as long as this is done on a competitive basis. A problem is created,
however, if we satisfy these exceptional demands on concessional terms
through one or another of our surplus disposal programs and render it
almost impossible for friendly countries to participate in such markets
on a commercial basis. Since increased requirements in some areas are
commonly offset by reduced requirements in others, such practices
obviously narrow the possibilities for export by other countries. While
it is not suggested that we refrain from engaging in disposal operations
where fortuitous market opportunities develop, we should use moderation
and make every effort to leave to commercial competition, including our
own, a substantial portion of such markets. Here again, we recognize
that the Department of State may, to some extent, have been responsible
for promoting programs that have virtually excluded other countries from
commercial competition in certain markets.
In addition to the foregoing, the Australian memorandum also raised
objections to the usual marketing provisions included in Public Law 480
agreements. The usual requirement under this heading is that countries
obtaining commodities under Title I programs also take specified
quantities of the same commodities from the U.S. on a commercial basis.
The terms of PL 480 unquestionably
require us to protect U.S. normal marketings. We should be pleased,
however, if an alternative procedure more acceptable to other exporting
countries could be worked out and thought is being given in the
Department of State to such a possibility.
