Office of the Historian

352. Information Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Bundy) to Secretary of State Rusk1

Washington, June 29, 1967.

SUBJECT

  • Current Developments in US-Philippine Relations
1.
Philippine Veterans Claims Agreement—On June 29, 1967 an Executive Agreement was signed in Manila under which the United States will pay (early in July) the Government of the Philippines $31,120,000 in settlement of two World War II Philippine veterans claims.2
2.
Bilateral Textile Agreement—Agreement was reached here on June 28, 1967, on a new bilateral textile agreement.3
3.
Engineering Construction Battalions (ECBs)—The bulk of the equipment for ECBs 1–5 was turned over to the GOP in Manila on June 24. In a speech at the turnover ceremony, Marcos deflated criticism of the US by his political opposition when he declared we had completely complied with our commitment to equip five battalions. FYI. The decision to equip the second five ECBs was conveyed to Marcos in the President’s letter of June 24.4 The letter and this decision have not been made public. We expect Marcos’ response to the letter shortly. End FYI. (Vice President Lopez may or may not be privy to the FYI portion above. This is provided for the Secretary’s information and in case the Vice President should raise it.)
4.
Philippine Aid to Viet-Nam—Marcos and his administration have consistently supported the Free World position in Viet-Nam. The 2,000-man Philippine Civic Action Group (PHILCAG) arrived in Viet-Nam in October 1966 and is stationed in Tay Ninh province. The GOP has been paying the salaries of the troops. The U.S. pays overseas allowances and furnishes equipment and logistic support for the PHILCAG.
5.
Future Economic Relations—President Marcos and President Johnson have recently named respective teams to discuss the type of instrument to replace the Laurel-Langley trade agreement after its expiration in 1974.5 The date and site for the first meeting have not yet been determined.
6.
Bases Negotiations—Over the past two years, we have taken major steps to update the 1947 Bases Agreement, which covers Clark Air Base, Subic Naval Base and Sangley Point Naval Station, as well as some smaller bases. In 1965, we concluded a new criminal jurisdiction article on the NATO-Netherlands pattern6 and relinquished some 50,000 acres of base lands. During the September 1966 Marcos visit, the Rusk-Ramos agreement was signed, reducing the duration of base use to 25 years.7 The GOP has now asked for, and we have authorized the Embassy to participate in, a preliminary review of other provisions, including customs and immigration, taxation and conditions of employment. These discussions are not yet underway.
7.
Special Fund for Education—Agreements have been concluded on two Special Fund for Education projects: a Classroom Construction Project on May 17, 1967 and a Textbook production project on June 26, 1967. President Johnson recently approved a third project, a $3.5 million Cultural Center Trust fund project.8
8.
Philippine Interest in US Rice—The Government of the Philippines is interested in purchasing 50,000 tons of US rice. We have approved CCC credit for 25,000 tons. Internal maneuvering by the Filipinos has delayed the purchase.
9.
Talks on Abaca Disposals—We are discussing with the Filipinos the problem of low abaca prices which they attribute to GSA stockpile disposals. We attribute the decline to inroads by synthetic fibers.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL PHIL–US. Secret; Exdis. Drafted by Dawson S. Wilson and Ralph C. Porter (both of EA/PHIL) and cleared by Richard M. Service (EA/PHIL), John R. Burke (EA), and Bundy. A note on the memorandum indicates that Rusk saw it.↩
  2. For text, see 18 UST 1392.↩
  3. The agreement was signed at Washington on September 21, 1967. (18 UST 2379)↩
  4. See Document 351.↩
  5. Information on the creation of the U.S. team and the issues that it faced are in a June 20 memorandum from Richard Moose of the NSC Staff to George Christian, White House Press Secretary. (Johnson Library, National Security File, Country File, Philippines, Vol. III, 7/66–7/67)↩
  6. August 10, 1965. (16 UST 1090) The agreed minutes of the 12 meetings between Ambassador Blair and Foreign Secretary Mendez, January 5–May 21, 1965, resulting in this agreement are in the following airgrams from Manila: A–571, February 5, A–603, February 17, A–629, February 25, A–705, March 19, A–787, April 7, A–840, April 23, A–879, May 4, A–916, May 14 and A–995, June 4, 1965. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 15 US–PHIL, DEF 15–4 PHIL–US, DEF 15–3 PHIL–US)↩
  7. See footnote 6, Document 342.↩
  8. For texts, see 19 UST 5082, 19 UST 5129, and 19 UST 5151, respectively.↩