53. Memorandum From the Deputy Assistant Secretary of State for Economic Affairs (Kalijarvi) to the Under Secretary of State (Hoover)1
SUBJECT
- Political Impact of Disposal Policies
The chief critics of the surplus agricultural disposal policies of the United States have been Canada and Australia. Their criticism has been a matter of basic unhappiness with the implications of the policy we have adopted of selling goods on a competitive basis (i.e., subsidized), and has not been directed at any particular feature of the program. The South Africans and the New Zealanders have also been critical and apprehensive, the latter particularly about butter. It is hard to say whether our disposal policies and actions have evoked enough reaction from any of these commonwealth governments to warrant the judgment that our political relations have been impaired.
In Latin America the criticism has come from Uruguay, Argentina, and Peru. Peru has benefited from our disposal policies by accepting shipments of wheat, but has been critical of our sales of cotton. Argentina has benefited by obtaining vegetable oil, but has been critical of our wheat sales. Uruguay has not benefited from the program and has been consistently critical. It is hard to see that our political relations have been impaired in Latin America through the operation of the program, but they could be.
Our European critics are led by Denmark and the Netherlands. The British have expressed general doctrinal objections to our surplus disposal, and have particularly disliked the 50/50 shipping clause. On this latter point they are supported firmly by the Scandinavians. The Italians have benefited from PL 480, but have been critical of our deals with Austria, Japan, and Greece. We have probably made few political enemies in Europe, however, as the result of our disposal actions.
In Asia there has been considerable diversity of opinion, depending on the country in question. Thailand and Burma have been very critical about our rice disposals, and perhaps our political relations with Burma have suffered. PL 480 is being used to good effect to improve our political relations with Indonesia, Pakistan, and, possibly, Japan. Egypt and Turkey have been extremely unhappy [Page 165] about our disposals of cotton, but have been prepared to benefit by PL 480 in other commodities.
In such multilateral forums as FAO and GATT, our relations with other countries have in general been damaged by the apprehension which other countries have over what we might do under our disposal program, even though they recognize that we have been moderate.
If we did not have enemies determined and able to exploit the unhappiness caused by our disposal policies, we could adjust ourselves in individual situations so as to minimize the harm done. We are, however, extremely vulnerable to political attack encouraged by Communists, for example, for wrecking the economies of Pakistan, India, Brazil, Turkey, and Egypt by dumping cotton, and we are vulnerable to a comparable attack with respect to the impact of our rice sales on Thailand and Burma. In a political sense, the most important commodities from the standpoint of our foreign policy are rice and cotton.
- Source: Department of State, Central Files, 411.0041/12–855. Official Use Only. Drafted by Willis Armstrong.↩