The Secretary of State to the Chargé in Cuba (Briggs)

No. 925

Sir: With further reference to the proposed supplementary trade agreement with Cuba, public hearings were held on September 8, 9 and 10, 1941 following the issuance on July 26 of a public notice of intention to negotiate such an agreement, the recommendations of the trade-agreements organization regarding the concessions to be proposed to the Cuban Government have now been approved, and there is attached hereto the text of a note which you are authorized to hand to the Minister of State setting forth this Government’s proposals.

The utmost importance is attached to the conclusion of the proposed agreement at the earliest possible date. With this in mind, every effort has been made to include in this Government’s original offers of concessions on products imported from Cuba, the most favorable possible customs treatment. It is believed that the offers which you [Page 203] are now authorized to present to the Minister of State represent the maximum concessions which this Government is in a position to grant.

With respect to the requests of this Government for concessions by the Cuban Government on products imported from the United States, it may be noted that although the number of items is relatively large as compared with those on which concessions are offered, it is believed that the value of the trade involved in all items on which duty reductions are requested does not exceed, with the exception of rice, more than about 3,500,000 pesos per year. Regarding rice, it will be noted that a request has been made for a reduction in duty from 1.85 to 1.50 pesos per hundred kilograms. It is believed possible that the Cuban Government may present a counter-proposal on this item with a view to limiting the application of the reduced duty to a specified quantity of rice of United States origin. The trade-agreements organization will, for your own information, be prepared to consider such a counter-proposal.

It is hoped, in view of the limited amount of Cuban import trade covered by this Government’s requests for concessions, that the Cuban Government may find it possible to grant those requests with a minimum of negotiation.

With respect to the general provisions of the proposed agreement, it is believed that the comment relating thereto which appears in the attached note to the Minister of State, covers the principal points involved in this Government’s proposals. In view of the nature of the changes or additions suggested, and the fact that the Government of Cuba would gain definite advantages from the standpoint of ability to secure greater revenues, it is not anticipated that serious difficulty will be encountered in obtaining agreement by the Cuban Government to our proposals. A definitive text covering the proposed changes will be sent to you as soon as possible.

Full powers to sign the proposed agreement on behalf of this Government, once an accord has been reached with the Cuban Government, are being prepared for transmittal to you in the near future.

Very truly yours,

For the Secretary of State:
Sumner Welles

Draft Note From the American Chargé in Cuba (Briggs) to the Cuban Minister of State (Cortina)5

Excellency: I beg to refer to conversations which have taken place with you with respect to the negotiation of a further supplementary [Page 204] trade agreement between the United States and Cuba. Agreement having been reached regarding a general basis, a public notice of intention to negotiate a supplementary agreement with Cuba was issued on July 26, 1941, together with a list of the products on which the Government of the United States would consider the possibility of granting concessions in the proposed agreement. A supplementary list of products was issued on August 18, 1941,7 both this list and the original list having previously been shown to you and having received your concurrence on behalf of your Government.

The public hearings scheduled by the announcement of July 26 were held in Washington on September 8, 9 and 10, 1941, and the appropriate agencies of my Government have subsequently been engaged in studying the information received orally and in writing as a result of the public notice. I am now instructed to submit to you proposals with respect to the concessions which the Government of the United States is prepared to offer, the concessions desired from the Government of Cuba and the various changes which are suggested in the general provisions of the existing agreement.

In formulating the concessions which the Government of the United States is prepared to grant to Cuba in return for the concessions requested upon United States export products, my Government has been guided by the thought that the negotiations for the proposed agreement should be brought to a successful conclusion as rapidly as possible for reasons which I am sure Your Excellency fully appreciates. In an effort to curtail the length of the negotiations as much as possible, therefore, my Government has included in its first proposals what are believed to be the maximum possible concessions which can be offered to Cuba. These concessions are set forth in detail in Enclosure I to this note.8

With respect to sugar, the most important item in the proposed agreement from the viewpoint of Cuba, it will be noted that an offer is made to reduce the duty on standard raw sugar of Cuban origin from 90 cents to 75 cents per hundred pounds. In addition, and of greater importance to Cuba than the reduction in duty which is offered, is the arrangement whereby, through the elimination of the present note following item 501 in the agreement, the rate applicable to imports into the United States of sugar of Cuban origin will remain at 75 cents per hundred pounds even if legislation controlling United States sugar production and imports is no longer in force. If in such an event, however, and as a result of unforeseen developments and of the concession granted, the President of the United States found that sugar were being imported from Cuba in such increased quantities [Page 205] and under such conditions as to cause or threaten serious injury to domestic producers, he would, if he found that the public interest would be served thereby, impose such restrictions upon the concession, or modify it by the imposition of quantitative regulations or otherwise, to the extent necessary to prevent such injury. A draft text of the provisions to carry out the foregoing proposal will be found in the note following item 501 in Enclosure I.

With respect to tobacco, it will be noted from Enclosure I that concessions are offered in the rates of duty on wrapper, filler and scrap tobacco of Cuban origin which will have the effect of reducing those rates to the maximum extent permitted under the Trade Agreements Act.9 My Government is not offering a further reduction in the rate of duty on Cuban cigars or to increase the amount of filler and scrap tobacco which is entitled to entry at the reduced rates of duty.

In addition to the foregoing, my Government is prepared to offer the maximum reductions in duty permitted by the Trade Agreements Act on the following products of Cuban origin: various medicinal products of animal origin, classified under tariff paragraphs 5, 23 and 34; marble chip or granite, under tariff paragraph 214; mangoes, paragraph 746; and fruits in their natural state or prepared or preserved, under paragraph 752.

On the various types of molasses and sugar sirups, under paragraph 502, an offer is made to bind the existing rates of duty against increase. On the first item listed under paragraph 502, an arrangement has been provided in the note following the item whereby imports of products from Cuba classified under this item will be admitted at the present reduced rates of duty up to an amount of 1,500,000 gallons per year, with a higher rate, equal to 20 percent below the statutory rate, applying to imports in excess of that amount. The note also provides that entries of Cuban molasses and sugar sirup under this item shall not be permitted to enter at the reduced rates of duty applying to imports of these products from other countries by virtue of any concession granted in a trade agreement with a foreign country other than Cuba. It is also provided that entries from Cuba under this item shall not be admitted at reduced rates of duty under customs quotas on such products which may be granted in other trade agreements. The effect of the foregoing is to grant Cuba an exclusive concession applicable to 1,500,000 gallons per year, while at the same time preserving for the beneficiary for whom it was originally intended, the concession under item 502 in the trade agreement between the United States and the United Kingdom, effective January 1, 1939.10 On other edible molasses [Page 206] and sugar sirups under paragraph 502, the rate of duty now applicable to imports from Cuba would be bound against increase; in addition, provision has been made, by a note following the item, whereby no quantitative limitation would be imposed by the United States on imports of products under this item from Cuba which would restrict the importation of such articles to an amount less than the quota for liquid sugar of Cuban origin specified in Section 208 of the Sugar Act of 1937.11 On the third type of molasses, covering so-called blackstrap and high-test molasses, my Government is prepared to bind the existing low rate of duty.

On fresh, chilled or frozen beef and veal, an offer is made to reduce the present rate of 4.8 cents per pound applicable to Cuban products under this item, to 3 cents per pound. On fresh, chilled, frozen, prepared or preserved frog legs, an offer is made to reduce the specific rate of duty by the maximum extent permitted, from 4.8 to 2.4 cents per pound, and to reduce the minimum ad valorem duty from 16 percent to 10 percent.

With respect to grapefruit, a concession is offered consisting of an extension of two weeks, or until October 15, in the present period from August 1 to September 30, inclusive, during which grapefruit of Cuban origin may enter the United States at the reduced rate of duty of 6/10ths of one cent per pound. In connection with this concession, my Government would desire to enter into an understanding with the Cuban Government, through an exchange of notes, on the subject of maturity tests and grade and size standards of grapefruit exported from Cuba to the United States.

With further reference to paragraph 752, my Government would be prepared to expand the existing concession on mango pastes and pulps and guava pastes and pulps, consisting of a 50 percent reduction in duty, to include all fruit pastes and fruit pulps.

With regard to lima beans, paragraph 765, my Government is prepared to modify the language of the existing concession in a manner which it is believed will permit fresh frozen and shelled lima beans to be imported into the United States from Cuba under the same conditions as those applying to lima beans in the pod, on which a concession was granted in the trade agreement in 1934.

In return for the foregoing concessions which my Government is prepared to offer, there are set forth in detail in Enclosure II12 the concessions which are desired for the benefit of United States export products. The requests cover reductions in duties, bindings against increased rates and certain requests involving special tariff problems affecting exports from the United States.

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Rice is the most important single commodity covered by the requests, and on this item a reduction in duty is sought.

In general, the amount of trade involved in my Government’s requests covers but a very modest proportion of total Cuban imports, and it is believed that Your Excellency’s Government will find it possible to respond favorably to those requests.

With respect to the form in which the requests made by my Government are presented in Enclosure II, it is believed that the concessions sought will be found to be clearly indicated in the final column in those cases in which duty reductions are desired. The underlined words appearing in certain of the descriptions of articles indicate the new or additional nomenclature which is desired to replace or amend existing language. In the case of the first item, razor blades, under item 53–F, the concession requested consists of a reduction from 10 percent to 3 percent in the Public Works Tax applicable to that product. In the case of item 166–D, wooden crates for packing fruits and vegetable products, the concession sought consists merely of a binding of existing tariff treatment.

With reference to the general provisions of the existing agreement, my Government believes that the occasion of the present negotiations offers an opportunity to effect a number of changes which appear to be desirable. The amendments suggested are for the most part intended to provide greater flexibility in the operation of the agreement and to incorporate improvements in the technical drafting of several provisions; proposals are also included which will have the effect of providing greater freedom of action for the Government of Cuba. Specifically, my Government wishes to propose the following changes in or additions to, the existing general provisions:

It is believed that Article V, on quotas, might be replaced by a more modern text. It is felt that certain of the clauses contained in the present text might more appropriately be included in a general reservations article applicable to the entire agreement. The specific text which will be suggested is that which has been developed by my Government for use in trade agreements.

My Government is prepared to agree to the liberalization of Article VIII, as amended, on internal taxes, for the purpose of making reciprocal the provisions relating to compensating taxes, which are now unilateral, and of releasing the Cuban Government from the existing restrictions against imposing new or increased internal taxes for general revenue purposes on products imported from the United States and included in Schedule I of the agreement.

With respect to Article X, on currency depreciation, my Government believes that this provision as drafted has not served any useful purpose and should be eliminated.

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On the question of the exchange control provisions, Article XI, my Government feels that the present draft should be replaced by provisions such as those which have been developed more recently in the light of experience with current exchange problems.

Due to the change which is proposed in the note following item 501, relating to sugar, it is believed that appropriate changes should also be effected in the third paragraph of Article XVII of the agreement, as amended.

I anticipate being able in the immediate future to provide Your Excellency with a definitive text embodying the foregoing proposals of my Government.

Accept, Excellency, the assurances of my most distinguished consideration.

  1. This note was handed to Dr. Angel Solano, Chief of the Economic Section of the Ministry of State, on September 30.
  2. See Department of State Bulletin, August 23, 1941, pp. 152 ff.
  3. Not printed.
  4. Approved June 12, 1934; 48 Stat. 943.
  5. Agreement signed November 17, 1938. For correspondence concerning this agreement, see Foreign Relations, 1938, vol. ii, pp. 1 ff.; for text, see Department of State Executive Agreement Series No. 164, or 54 Stat, (pt. 2) 1897.
  6. 50 Stat. 903, 908.
  7. Not printed.