Foreign Relations of the United States, 1964–1968, Volume XVII, Eastern Europe

116. Memorandum of Conversation¹

Washington, January 16, 1964.

SUBJECT

• US-Polish Economic Relations

PARTICIPANTS

• U.S.
  • U—Mr. Ball
  • U—Mr. Springsteen
  • EE—Mr. Kaiser
• Polish
  • Franciszek Modrzewski, Deputy Minister of Foreign Trade
  • Edward Drozniak, Ambassador
  • Zbigniew Bidzinski, Economic Counselor

Modrzewski declared that this was an important opportunity to speak about bilateral and multilateral problems. He was pleased that the PL-480² negotiations were beginning to move as the conclusion of a PL-480 agreement was important for Poland in its effort to plan its imports of grain and other commodities from the US. Last year the grain market had become somewhat crowded because of Soviet wheat purchases on world markets. Poland, he said, wants to increase its imports from the US as well as its exports. He was anxious to know the views of the US with respect to the future development of its trade with Poland.

Mr. Ball commented that the US is interested in maintaining a close relationship with Poland. The US is also interested in having Poland progress from PL-480 transactions to commercial purchases of agricultural commodities in the US.

Modrzewski then expressed the deep appreciation of his Government for the favorable action on MFN.³ Poland desires short term and other credits from the US for the purchase of agricultural and other products. Although competition for the sale of industrial products in Western Europe was severe, Poland could compete because of the good progress it had made in this area. Poland wishes to expand its exports to the US. Last year Polish exports to the US were probably slightly higher than the year before despite the uncertainty about MFN and the boycott campaign in the US which he now understands has died down.

Mr. Ball said the US seeks to discourage such actions as the boycott but it cannot always control them.

Modrzewski explained that Poland wants to expand its exports to the US in order to be able to meet its debt which will represent an increasingly heavy burden. Poland enjoys and wants to keep its good reputation for meeting its debts.

Mr. Ball then mentioned as a limiting factor Poland’s unsettled bond debt to Americans. Modrzewski said Poland is aware of this matter, but Poland is still poor. Poland has to be careful about assuming a new schedule of debt.

In response to Mr. Ball’s inquiry, Modrzewski said Poland’s agricultural production last year was better than the year before. Until the end of October the situation seemed very bad but more recently there were indications that the situation was not so bad as previously supposed. The real difficulty stemmed from 1962 when about 2 million pigs and a large number of cattle had been lost. It was now necessary to regain these losses. This year Poland was buying more than 2–1/2 million tons of grain abroad. Although Poland is supposed to receive 400,000 tons of grain annually from the USSR and had in fact received 800,000 in the last few years, Poland had received nothing this year. This month Poland had purchased for cash 150,000 tons of wheat in the US. For the still developing Polish economy these cash purchases abroad are difficult. Grain imports are structural for Poland. The Polish harvest determines the amount of required imports which might vary anywhere from 2–3 million tons. Poland wants to be a regular buyer in the US.

Modrzewski said he understands the interest of the US in having Poland increase its commercial purchases in the US. He wondered, however, whether it would be possible to continue PL-480 transactions.

Mr. Ball said he would not want to rule out that possibility. The Poles now have our present PL-480 offer. We realize that the shift to commercial purchases is not achieved overnight and that the shift has to be progressive. We are willing to consider the matter sympathetically.

Modrzewski commented that for planning purposes, the delay in proceeding with a new PL-480 agreement was unfortunate. Mr. Ball regretted the delay and said the US is interested in Poland’s problem and looked toward the evolution of our relationship. The US is in the meantime interested in developing its trade with Poland.

Modrzewski then inquired about the Kennedy Round and declared that Poland is interested in participating. Mr. Ball said he was pleased to hear this. Since the US maintains an MFN relationship with Poland, we are interested in the possibilities of Poland’s developing a closer relationship with the GATT. In answer to Modrzewski’s question, Mr. Ball said the US approves of Poland’s desire to participate in the Kennedy Round.

1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Kaiser on January 17 and approved in U on January 22.
2. For text of P.L. 480, the Agricultural Trade Development and Assistance Act of 1954, see 68 Stat. 454.
3. Section 402 of the Foreign Assistance Act of 1963 (P.L. 88–205), approved on December 16, 1963, authorized the President to restore most-favored-nation status to Poland and Yugoslavia.