Foreign Relations of the United States, 1958–1960, Cuba, Volume VI

415. Memorandum of a Conversation, Department of State, Washington, December 30, 1959¹

Washington, December 30, 1959

SUBJECT

• The Cuban Program

PARTICIPANTS

• The Under Secretary
• Mr. R. R. Rubottom, Jr.—Assistant Secretary, ARA
• Mr. W.T.M. Beale, Jr.—Acting Assistant Secretary, E
• Mr. H.R. Turkel—Director, REA
• Mr. Edwin E. Vallon—Acting Director, CMA

Mr. Rubottom referred to the forthcoming meeting on January 8 with Mr. True Morse and representatives of the sugar industry and the need for a firm Administration position on sugar legislation by that time. He said we should oppose a cut in the Cuban quota since such action would only increase resentment in Cuba against the United States and would give Castro additional ammunition to rally support around him. He mentioned that elements of the sugar trade were either opposed to such a cut or were not pressing for it.

Mr. Rubottom stated that the Administration position should favor the granting of discretionary authority to the Executive to cut foreign quotas. He believed that we should be prepared to say exactly how such authority would be used. We should also favor a four to five year extension of the Sugar Act which is also favored by the sugar industry itself.

He said that in dealing with compensation for expropriated properties he favored eventual imposition of a tax on Cuban imports. This was supported by the United States-Cuban Sugar Council. He believed that we should not move on the tax at this stage in the game, but that we may have to come to it if our efforts to negotiate a solution with the Cubans are unsuccessful.

A discussion ensued regarding the reallocation of any cuts which might be made in the Cuban quota. Mr. Rubottom and Mr. Turkel favored granting authority to the CCC to purchase such quantities at world market prices. Mr. Beale supported the thesis contained in Mr. Mann’s memorandum² that this would put the Administration into the sugar business and was in opposition to Administration policy. He favored reallocating such quota cuts to other underdeveloped countries who would benefit by the additional income derived from such sales. Mr. Rubottom said that such reallocation of quotas would create difficulties in our relations with other countries, would promote the uneconomic growth of sugar production and probably create unmanageable surpluses.

At this point Mr. Rubottom suggested that Mr. Dillon read the memorandum entitled “Action Program on Cuba”.³ He said that time is running out and that if Cuba gets by with the actions she is taking against American property owners, our whole private enterprise approach abroad would be in serious danger. In discussing Item 2 of the memorandum, which includes a number of steps leading eventually to the imposition of an import tax on Cuban products, Mr. Beale stated that such a tax might set a precedent and bring forth demands for like treatment by Americans whose properties had been expropriated in other countries. Mr. Beale also expressed concern regarding the timing and manner of denouncing our commitments under GATT, feeling that unless this is properly done it might represent a threat to United States-GATT objectives elsewhere in the world. He also pointed out that Cuba might very well withhold its sugar from the United States market, thus blocking the objective we sought in imposing an import tax. On the latter point, Mr. Turkel observed that if such action were taken by Cuba, it would be possible for the United States to pick up between one and one and one-half million tons of sugar on the world market.

Mr. Dillon stated that he did not feel the tax would be looked upon as a precedent but rather would be understood as being directly related to the premium on sugar which Cuba enjoys in its sales to the United States.

Mr. Beale pointed out that the action in denouncing GATT commitments for the purpose of establishing a tax on Cuban imports could be interpreted as an interjection of a political issue in GATT, something which the United States and other members have scrupulously avoided in the past. Mr. Dillon believed, however, that the action could be defended on economic grounds, particularly by pointing out the economic aid which Cuba has received in the form of the premium on sugar.

Mr. Dillon read Mr. Mann’s memorandum on sugar legislation and observed that, in the matter of quota cuts, the problem appeared to be one of timing more than anything else. He said that we urgently needed a program which would lead to the solution of expropriation problems in Cuba. He observed that Mr. Mann’s paper does not solve this problem. Mr. Dillon did agree with Mr. Mann’s suggestion that any quota cuts be reallocated to other countries rather than calling upon the GOC to purchase such differences on the world market. He suggested that a clause in the proposed sugar legislation might be added which would call upon the President to submit in writing his proposals for transferring the quota cuts, these proposals to become effective in 60 days if no objection is raised by Congress. He said nibbling at the Cuban quota will not produce the results we seek, but that we should, however, reduce our dependence on Cuba as a source of supply. This, he believed, was more a question of timing rather than one of principle.

In regard to Item 2 of the action program, Mr. Dillon said that the details of this program should be worked out in a hurry by ARA, E and L and that any eventual tax on Cuban imports should be limited to sugar. He said that the GATT Secretariat should be kept informed of our purposes.

Mr. Dillon approved all items contained in Mr. Rubottom’s memorandum on the Cuban action program with the modifications indicated above on Item 2.⁴

1. Source: Department of State, Central Files, 811.235/12–3059. Confidential. Drafted by Vallon.
2. Document 413.
3. Supra.
4. In a December 30 note to Devine, Frank Mau (S/S–RO) briefly described Dillon’s response to the proposed action program and requested, with regard to recommendation 2, that ARA, E, and L submit a coordinated recommendation to Dillon no later than January 5. (Department of State, Central Files, 737.00/12–3059)