229. Action Memorandum From the Assistant Secretary of State for Economic Affairs (Johnson) to Acting Secretary of State Ball1
SUBJECT
- Sugar
Recommendation
That you stress to the President:
- (1)
- That a one-year extension of the Sugar Act—regrettably necessary because of the tight legislative calendar—should not prejudice the foreign share of this market. For this to be avoided, acreage controls called for under law must be applied in 1965.
- (2)
- The problem of surplus domestic production, if any, will not appear before 1965. The problem should be met at that time and not today. There exists no need now, therefore, for the grant of a temporary quota to domestic growers.
- (3)
- Secretary Freeman apparently wants no acreage controls and a bigger domestic quota now. That will prompt strongly adverse reactions abroad, particularly in Latin America. It will leave the impression that the Administration has buckled to domestic interests contrary to our foreign trade policies and the principles of the Alliance for Progress.
Discussion
We are clearly heading for a one-year extension of the present Sugar Act. We don’t object provided that in the coming year no measures are taken which prejudice the share of the market assigned to foreign suppliers. The Department of Agriculture, the partisan of domestic farmers, has two such measures in mind:
- (1)
- It wants authority from the Congress to grant domestic growers a special quota of up to 500,000 tons of sugar for use this year or next. It argues that the domestic quota this year is less than production, hence the need for extra quotas. (Actually, this year’s excess production is not available for marketing until next year.)2
- (2)
- It opposes acreage controls in 1965 on domestic growers. Such controls appear mandatory in the kind of weak market we are likely to face. However, Secretary Freeman says he has a moral commitment to [Page 616] domestic growers to permit them to grow freely in 1965 and excess production in 1965–66 will therefore follow.
The two measures—excess production and the “temporary” quota—will distinctly prejudice foreign suppliers. Quotas once granted domestic farmers are not taken away. Excess production argues for quota relief—at somebody’s (foreign suppliers’) expense.
Neither action is warranted. Only in mid-1965 will we know the extent to which farmers have over-produced. Then—and not before—temporary quota relief should be granted on a one-shot basis. New legislation should be considered free of any argument that the crop in the ground is way in excess of quota; hence the need for acreage controls.