Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

255. Memorandum From the Under Secretary of State for Economic Affairs (Mann) to Secretary of State Rusk¹

Washington, March 2, 1965.

SUBJECT

• Participation in Negotiations for New World Sugar Agreement

In facing up to the question of our participating in negotiation of a world sugar agreement, I find the following considerations pertinent:

1. In the main, sugar is an export crop for LDC’s, most of whom are in Latin America. Most cannot produce at under 4 cents per lb. With world sugar prices (apart from sales under preferential arrangements) currently under 2.5 cents per lb. they are facing serious losses of foreign exchange income, and some of them, severe balance-of-payments difficulties. The LDC sugar producers, therefore, are pressing urgently for negotiation of a new world sugar agreement which would provide for export quotas and market access assurances to maintain at least a 4 cents per lb. minimum price.

2. The United Kingdom, although a large importer of sugar, favors a new agreement in the interest of helping Commonwealth LDC sugar producers.

3. Some sugar importers accept the desirability of an agreement, because of their own interest in having stable sugar prices and in order to help the LDC’s. However, Canada and Japan, among the largest importers of sugar, are not overly enthusiastic about an agreement. (Canada does not participate in the Commonwealth sugar preference arrangement.) Canada and Japan are likely to reject any agreement ab initio designed to exclude Cuba. Without them there will be no agreement.

4. If at the April meeting of the International Sugar Council, we abstain from or vote against a resolution recommending that the Secretary General of the UN convene a negotiating conference, or if we openly declare we will participate only in an agreement from which Cuba is excluded, there will be no agreement and political opprobrium will rain down upon us from the sugar producers and other LDC’s with a stake in commodity stabilization arrangements. On the other hand, the course of the negotiations would give us many opportunities to press for and line up support for features in a new agreement which the Cubans would find unacceptable. This could lead to an agreement without Cuba; one from which the Cubans had excluded themselves. With such a negotiating history, the Japanese and Canadians might be willing to go along with an agreement without Cuba. On the other hand, if we find we are moving toward an agreement which the Cubans will accept, we could still decline to participate and base our decision on dissatisfaction with details of the arrangements rather than on bare-faced objection to an agreement including Cuba. There would be some political blame if our decision meant no agreement, but it would be minimal in relation to the blame that would accrue to us if we torpedo the negotiation before it started.

Accordingly, I recommend approval of the attached action recommendation.²

1. Source: Department of State, EB/ICD/TRP Files: Lot 75 D 462, Sugar Conference 1965. No classification marking. Drafted by J. A. Silberstein on March 2.
2. Memorandum from Johnson (E) to Secretary Rusk, February 11, not printed. Secretary of State Rusk initialed his approval of the recommendation on March 15.