856D.2395/8–1351: Telegram
The Secretary of State to the Embassy in Indonesia
247. Embtel 242, Aug 13. Deptel 170, Aug 7, refutes Indo claims re freedom rubber markets, and you may wish fully discuss with Indos points covered therein.
At Rome rubber conf Indos charged US UK collusion in instituting rubber export controls. Latter countries formally denied charge, stating US had no advance knowledge Brit intentions. In view this previous denial Emb may wish express surprise at continued innuendos in letter hinting bad faith US negotiators.
Dept interprets eighth para letter beginning “goes without” as meaning Indo intends perform on contract whether or not US agrees suggested changes. If this interpretation correct, Emb may wish express gratification instead of surprise suggested Deptel 176, Aug. 9.1
Emb shld make clear US entered contract without inside info or mental reservations, will carry out its half of bargain and expects similar performance by Indo. With suitable palaver Emb may add that altho US rejects any implication of obligation to renegotiate US always sympathetic to plea of friend that feels itself injured. For this reason and being conscious its dominant position rubber market US willing make reasonable modifications to contract.
Emb authorized discuss renegotiation along fol lines:
- 1.
- Anything above market price completely unacceptable. Seventy cent price or even floor 56½ cents if this is what Indos mean is fantastic since price today approximates fifty cents.
- 2.
- US willing abandon four months pricing formula specified in contract and substitute formula based on average price prevailing during calendar month preceding shipment as determined from Singapore Chamber of Commerce daily quotations.
- 3.
- GSA prefers price based on quotation for shipment within 30 days. Published quotation most nearly mtg this definition known to trade as “nearest month of shipment”. Willing accept price based on quotation known to trade as “prompt shipment” (meaning price for shipment within 15 days) less 3 percent as in present contract. Willing as last resort abandon 3 percent discount and use full prompt shipment quotation if necessary prevent cancellation contract. Not willing base contract on spot price.
- 4.
- As you likely aware, Deptel 415, Bangkok, Aug 17, rptd Djakarta US contract with Thais has been made public.2 We are willing consider with Indos same price i.e. which rubber commands in world market; but do not believe this wld be to Indo advantage since US interpretation of world market is lowest Singapore, London or Amsterdam.
- 5.
- US willing add force majeure clause suggested by Indo with fol changes which Dept will explain if requested by Emb: (a) Substitute “contracting parties” for “contractors” (b) Delete “unforeseeable” (c) After “acts of” insert “God or” (d) Delete “one of contractors or” (e) After “fon Govt” insert “civil strife or disorder” (f) Delete “or if any of contractors places of business become inoperative due to conditions beyond control of Indo Govt” (g) After “as soon” insert “thereafter as circumstances permit but in no event later than six months” (h) Substitute “contracting party” for “contractor”.
- 6.
- GSA welcomes Indo willingness modify contract specify delivery sheets I, II, III but not willing adopt Indo pricing formula to obtain these grades. If Emb finds it necessary base revised contract on full prompt shipment quotation without present 3 percent discount it shld attempt obtain Indo agreement deliver sheets I, II, III in return for US agreement forego discount.
If Indos receptive any these suggestions Emb may renegotiate contract subject approval Dept and GSA. Questions re Singapore Chamber of Commerce quotations or trade terminology cld be discussed with Djakarta Rubber Trade Assoc or referred Wash or ConGen Singapore. Present intention not send negotiator from Wash. Emb’s views requested.