611.3731/841a

The Secretary of State to the Ambassador in Cuba (Caffery)

No. 286

Sir: The negotiation of the trade agreement with Cuba affords, I believe, significant opportunity for giving practical effect to the policy of this Government towards the nations of this hemisphere. The keystone of this policy must be the development of mutually helpful political understanding and of mutually profitable commercial relationships.

In the case of Cuba the recent signature of the new treaty of relations,49 eliminating the permissive right of intervention by this Government, has removed a chronic source of friction between our two countries, and has placed our political relations on a basis of true and friendly equality. The trade agreement should, by removing barriers to commerce between the two countries, prove a powerful stimulus to Cuban economic rehabilitation, and at the same time, by increasing Cuba’s purchasing power, open new markets for American farm and factory products.

The Cuban agreement will, moreover, be the first to be signed under the tariff bargaining authority conferred upon the President by the last session of Congress. This first trade agreement makes it clear that in order to expand American export trade greater trade opportunities must be afforded foreign products in this market.

With regard to the concessions requested by the Cuban Government (your despatches Nos. 222, 540, 567 [561], 669, 746, 855 [858] and 888, of April 7, May 29, June 2, 16 and 27 and July 10 [11] and 17, 1934, respectively50) detailed and painstaking attention has been given to each. The full measure of the desired trade advantages has been accorded wherever these advantages do not involve unwarranted conflicts with American interests or impair our bargaining position with respect to third countries. In many instances the concessions requested by Cuba have been scaled down. In all cases, however, the fullest consideration has been given the Cuban requests. There would consequently appear to be no reason for any further study of these requests by this Government.

I. The attached list covers the concessions this Government is prepared to make (Enclosure l).51 The concessions indicated are maximum concessions; prohibitions of the tariff bargaining law or reasons of policy make it impossible to increase them.

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With regard to the concessions requested, whether granted or not, there is enclosed herewith a series of background memoranda (Enclosure 2).52 In those cases where no concessions have been granted, these memoranda should prove helpful in explaining the reasons for our inability to accede to the requests made.

II. It will be observed that in many cases separate classifications have been established. The exact wording of these new classifications and of other Notes to be inserted in the schedule of Cuban products accorded concessions will be forwarded at an early date.

III. Sugar. It is proposed to reduce the duty on imported Cuban sugar (96 degrees) to 90 cents per hundred pounds, and to make proportionate reductions in the other degrees of sugar entering under paragraph 501 of the Tariff Act of 1930.53 The magnitude of this concession is a further indication of the desire of this Government to assist the Cuban people in regaining an adequate and satisfactory standard of living. In view of the predominance of sugar in Cuban economy, the effects of this concession should be felt throughout the Island, in its industrial as well as its agricultural life.

It is to be expected that the Cuban Government, in return for this concession so vital to its national livelihood, will agree to concessions which will prove equivalent to those now being proposed by this Government. Owing to the drastic decline of Cuban imports of American products, it is essential that effective concessions be obtained for our key export commodities in exchange for our concessions to Cuba. I have no doubt that the Cuban Government appreciates this point of view and will create the desired trade advantages for our goods. Of our exports to Cuba, agricultural commodities have suffered the heaviest declines. If the sugar concession above indicated is to be made effective, it is imperative that greater reductions in rates than those to which the Cuban authorities have agreed to grant up to the present be secured on certain commodities. An air mail instruction will go forward immediately on these points,52 which instruction does not preclude, of course, the securing of the concessions considered desirable for American industrial products.

It will be necessary to include a Note in the schedule of concessions to Cuba along the lines of the statement appearing under sugar in the list of concessions (See Enclosure 1); namely, that upon the termination of the Costigan–Jones sugar legislation and in the absence of any similar legislation providing for quotas, the duties on all products classified under paragraphs 501 and 502 shall automatically be restored to the rates then prevailing less the preference of twenty percent.

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On account of certain unforeseen difficulties that have arisen concerning the extent and nature of the concession on the sugars classified under paragraph 502 of the Tariff Act of 1930, it will be necessary to forward a supplementary instruction about this matter.

IV. Tobacco. Owing to the domestic production-control program it will be necessary to establish a quota for Cuban cigar leaf tobacco, if concessions in rate are to be made. The attached memorandum (Enclosure 3)54 explains the reason necessitating this action, and also describes the basis upon which it is proposed the quota be established. You should strongly impress upon the Cuban authorities the difficulties the domestic producers of tobacco are now encountering and that only upon the basis of the proposed quota is this Government in a position to make any concession on rates for cigar leaf tobacco.

At an appropriate place in the schedule of Cuban products entering the United States a Note will be inserted setting forth the procedure to be followed in establishing the cigar tobacco quota, which will be along the lines of the statement included under tobacco and tobacco products in the list of concessions. (See Enclosure 1.)

It will be observed that this statement provides that if and when the cigar tobacco adjustment program is, in the opinion of the Secretary of Agriculture, abandoned or substantially abandoned, the duties on all forms of Cuban cigar tobacco shall automatically be restored to the rates then prevailing, less the preference of twenty percent. If there is strong opposition by the Cuban authorities to this latter provision, the Department of Agriculture has indicated its readiness to insert in the Note a provision to the effect that this Government agrees to reopen for discussion with the Cuban Government the matter of rates. This latter proposal should be held in reserve, and presented only if it is impossible to overcome the objection of the Cuban delegates.

V. Avocados. As I have repeatedly stated, this Government is opposed to the creation of any new barriers to international trade. The tariff bargaining law provides that there shall be no transferring of articles between the dutiable and free lists. Consistent with the declared policy of this Government, therefore, I desire that the general provisions of the tariff agreement include as a first article a restatement of Article I of the Reciprocity Convention of 1902 regarding the free list.

At the same time the Embassy is aware of the objections by the avocado producers to the free entry of avocados from Cuba, and of the pressure brought to secure an amendment to Article I of the Reciprocity Convention of 1902 which would exclude avocados from [Page 146] its application. For reasons of policy I believe it important to afford some measure of relief to the avocado producers in this country. Inasmuch as it is proposed to handle the question of perishable fruits and vegetables by means of seasonal tariffs, which will permit the Cuban producers to have unlimited access to this market during the period of least American production, and which will at the same time protect the domestic producers during the months of their greatest production, I believe that some similar arrangement in connection with avocados should be agreed upon. You are requested, therefore, to ask the concurrence of the Cuban Government to the restriction of the exportation of avocados to the United States during the months January to May, and October to December, inclusive, of each year. Under this arrangement Cuban avocados during the months of June to September, inclusive, will have unlimited entry.

Since we are requesting Cuba voluntarily to confine shipments to certain months, and in order not to introduce any limitations into the body of the trade agreement regarding Article I, this understanding should be embodied in an exchange of notes. The enforcement of the restriction will, of course, rest entirely with the Cuban Government. At the same time should the understanding not be rigidly enforced, this Government would be obliged to give consideration to action under authority conferred by existing legislation.

The proposed text of the exchange of notes will be forwarded at the earliest opportunity.

V [VI?]. Manganese. Inasmuch as it is proposed that Article I of the Convention of 1902 be restated as Article I of the proposed trade agreement, manganese imported from Cuba will continue to enjoy free entry. However, you should appropriately and explicitly point out to the Cuban authorities that Cuba is not the chief source of supply for manganese imported into this country, and that the United States may at some future time negotiate a trade agreement with some third country, reducing the duty on manganese. Under the tariff bargaining law a reduction in duty of up to fifty percent is permissible. There is enclosed herewith a copy of a memorandum regarding manganese (Enclosure 4).55

Very truly yours,

Cordell Hull
  1. Signed at Washington, May 29, 1934; for text, see p. 183.
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  5. 46 Stat. 590.
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