611.3731/2333
The Ambassador in Cuba (Messersmith) to the Secretary of State
[Received July 19.]
Sir: I have the honor to acknowledge the receipt of the Department’s instruction no. 755 of July 9, 19412 referring to the several requests which have been made in recent months by the government of Cuba [Page 200] that a further supplementary trade agreement be negotiated between the United States and Cuba and to my despatches on this subject.
The Department authorizes me to inform the Cuban Minister of State through an Aide-Mémoire that our government is now prepared, once an accord has been reached with the Cuban government on the proposal set forth in its instruction under reference, to issue public notice of intention to make a further agreement supplementary to the trade agreement concluded on August 24, 1934.
In accord with this instruction I prepared an Aide-Mémoire and called on the Minister of State yesterday. I conveyed to him the substance of the information in the Department’s instruction no. 755 under reference, and I left with him an Aide-Mémoire, of which a copy is transmitted herewith.3
The Minister of State expressed his deep satisfaction with this proposed action of our government and said he would immediately get in touch with the President in order to be able to make an appropriate reply. I discussed with him fully the Department’s instruction and the procedure to be followed.
I said the first step would be for the Cuban government to inform us that it was prepared to proceed with negotiations on the basis of the Aide-Mémoire which I was leaving with him. Once I could inform my government that the Cuban government was prepared to proceed on this basis, the appropriate arrangements would be made in the Department of State for public notice of intention to make a further agreement supplementary to the trade agreement concluded on August 24, 1934. I emphasized that such notice would have to be given simultaneously by both governments. I made it clear that it was absolutely essential for the normal and successful progress of these negotiations that nothing whatever be said by the Cuban government with regard to this matter until public announcement was made simultaneously. I did not fail to bring to the Minister’s attention how important it was that this question of the possibility of negotiations be kept for the present in strict confidence and until both governments were prepared to simultaneously announce the negotiations. The Minister said he thoroughly understood and would see that there would be no premature statement of any kind here and would exercise all the necessary reserves in this matter.
I said to the Minister that the list of articles on which we were prepared to consider concessions must be an interesting one to the Cuban government and indicated that a sympathetic understanding by us of Cuba’s problem would be shown. I presented to him various considerations why it would be inadvisable for the Cuban government [Page 201] to make any suggestions for the addition of further articles to this list on which the Cuban government might desire concessions. I intimated strongly that the articles mentioned in the Aide-Mémoire were the only ones on which my government would be prepared to consider concessions and that the inclusion of further articles might prejudice the successful course of the eventual negotiations. The Minister said he clearly understood this and that there would undoubtedly be a desire here to include further articles but he felt he could assure me that the government of Cuba would not request the addition of further articles.
The Minister of State expressed some interest in knowing what would be the articles on which our government might request concessions from the Cuban government. I told him that according to my instructions my government was not prepared at this time to submit such a list but that I could assure him it was not contemplated by us to request an extensive list of concessions, and that the request which we would make will take fully into consideration the existing economic and financial situation in Cuba. The Minister seemed to be satisfied with this and I believe that our failure to indicate the list of articles on which we will ask concessions will not interfere with a favorable response by the Cuban government.
I did not consider it advisable to say anything to the Minister that we might ask for a concession on rice. This question is a delicate one and I think it would be inadvisable to raise it at this time. The Department is aware that American rice pays only one-half the duty on admittance into Cuba which is paid on rice from all other origins, with the exception of Siam. In the case of Siam there is a further penalty duty. American rice, therefore, enjoys an extraordinary exceptional position in the Cuban market. Practically all of the rice imported into Cuba now comes from the United States, and I am informed that the American market has not been recently in a position to meet the full demand so that there have been imports from Ecuador.
As considerable quantities of rice came into Cuba from the Far East until several years ago, and as these imports paid the full duty, there has been a considerable loss of revenue to the Cuban Treasury through this almost complete dependence on the American rice market. I do not have accurate figures at hand, but I am informed that during the last fiscal year the Cuban government lost about a million dollars in custom revenues through the increased imports from the United States, which pay only one-half the duty. I am informed that this fiscal year there will be a loss of an additional million dollars, so that this year the loss in revenue will be approximately two million dollars.
[Page 202]In view of the distressing financial conditions in Cuba and that this loss of revenue is very considerable in its economy and in the government’s budget, I am inclined to think that it would not be advisable for us, without going into this matter most carefully, to raise the question of rice. We are already in an exceptional position, which position arouses a certain amount of criticism, and the rice growers here have been recently very vocal in regard to this matter. I have brought out this factor as I believe that we should consider very carefully all aspects in this matter before raising the question of rice.
I informed the Minister of State that once the public announcement had been decided upon and made, there would be a period of a month during which the Department of State through the Division of Trade Agreements would be holding hearings as a result of the public notice.4 Actual negotiations, therefore, with the Cuban government could not begin until at least a month after the public notice had been simultaneously made.
The Minister seemed to be agreeable to the suggestion of our government that the negotiations and signature of the agreement which may be reached be carried on in Habana.
I expect to get an early response from the Cuban government and shall immediately communicate with the Department upon the receipt of any reply.
Respectfully yours,