Office of the Historian

294. Memorandum From the Assistant United States Trade Representative for Trade Policy and Coordination (Phillips) to the Deputy United States Trade Representative (Smith)1

Washington, April 18, 1983

SUBJECT

  • U.S. Participation in the Negotiation of a New International Sugar Agreement (ISA)

As I mentioned to you Friday,2 we are running into a great deal of flak in our efforts to get approval for USG participation in the May Negotiating Conference on Sugar.3 Although no final decision has been taken within State, Under Secretary Wallis appears likely to oppose U.S. participation in ISA renegotiation. Treasury is also likely to oppose our participation; Assistant Secretary Sprinkel is the major advocate of this hardline stance on the Treasury side. In the case of both State and Treasury, the opposition stems from4 a philosophical aversion to commodity agreements.5 Incidentally, Treasury may put this issue on the agenda of the April 22 or April 28 SIG.6

Our failure to participate in the May Negotiating Conference would have disastrous consequences for our stance on commodities at UNCTAD VI and, in addition, would undermine our agricultural trade policy efforts. I have outlined some of the reasons favoring U.S. participation, which are well known to you, at the end of this memo.

I strongly recommend that we act quickly to ensure that a USG decision is taken to participate in the May Conference. (Our efforts will, of course, be somewhat complicated by Ambassador Brock’s recusation from sugar issues.) At this point, I think we should concentrate our efforts on the State Department. Also, I believe you should call Lyng and/or Amstutz and try to enlist the support of USDA. As I see it, our options are:

1.
Both you and Lyng or Amstutz could telephone Wallis and try to turn him around on this issue.
2.
Arrange for Secretary Block to send a letter to Secretary Shultz urging that the USG participate in ISA renegotiation. USTR support could be noted in this letter and, perhaps, Brock’s recusation.
3.
Arrange for letters from Block to Shultz and/or from you to Shultz (noting Brock’s recusation).

Option 2 or 3 could either be pursued subsequent to unsuccessful discussions with Wallis, or we could skip option 1 altogether.

The key reasons why we should participate in the ISA renegotiation are:

1.
A decision not to participate in the May Conference would undercut the low profile posture we are seeking to maintain on commodity policy (approved by Ambassador Brock7—see attached memo).8 It would underscore our position as a hardliner on commodity policy and render our efforts to maintain some semblance of Group B unity on commodity issues at UNCTAD VI impossible.
2.
If we don’t participate, we, in effect, set up U.S. sugar policy for the role of major villain on the world sugar market (now held by the EC).9 We would be telling other sugar exporters that we don’t give a damn about their problems as long as we can protect our own producers with restrictive policies. We can expect criticism of the U.S. sugar program and of U.S. commodity policy in general to increase dramatically.
3.
Given our own sugar program, it will not be very convincing to argue our devotion to the free market as the basis for non-participation in ISA negotiations.
4.
Non-participation would leave us without a “cover” for deferral of action on the 301 complaint against the EC brought by U.S. sugar producers. We will be either forced to admit that we have no case or to proceed with a very lame case.
5.
The ISA is not a significant burden to U.S. taxpayers or consumers. Our only budget outlay is for administrative expenses. Even if the ISA were successful, it would not maintain prices above the level dictated by our own domestic support program.
6.
Non-participation is inconsistent with our cooperative overtures towards the Caribbean and Latin America.
7.
A successful ISA could result in the reduction, or elimination, of U.S. restrictions on sugar imports—which would be highly desirable from an overall trade policy point of view.10
8.
There is a good chance that renegotiation of a new ISA will not be successful because of disagreements between the EC and other exporters. As the main focus will be on the division of exporter obligations, the United States will be able to assume a low-profile, sideline role in the negotiations. Consequently, it would be imprudent to volunteer ourselves, before the negotiations begin, as, scapegoats for their failure.11

  1. Source: Reagan Library, Douglas McMinn Files, Subject Files, Sugar Quotas. No classification marking. Sent through Nelson.↩
  2. April 15.↩
  3. An unknown hand underlined the portion of the sentence beginning with “to” and ending with “Sugar.”↩
  4. An unknown hand wrote in the left-hand margin: “1. Do not favor stabilization agreements. 2. But also do not favor lost opportunities to reduce U.S. domestic protection.”↩
  5. An unknown hand underlined the portion of the sentence beginning with “a” and ending with “agreements.”↩
  6. For portions of the minutes of the April 22 SIG–IEP meeting, see Documents 138 and 295. For a portion of the minutes of the April 28 SIG–IEP meeting, see Document 140.↩
  7. An unknown hand underlined this sentence.↩
  8. Not attached.↩
  9. An unknown hand bracketed this sentence.↩
  10. An unknown hand bracketed this point in the left-hand margin.↩
  11. An unknown hand highlighted this point in the right-hand margin.↩