The Ambassador in Cuba (Messersmith) to the Secretary of State
[Received December 15.]
Sir: I have the honor to acknowledge the receipt of the Department’s instruction no. 1080 of December 4, 1941 with respect to the negotiations in progress for the Supplementary Trade agreement. Although this instruction was dated December 4, 1941 and was, I understand, placed in the airmail that evening, it did not reach this Embassy until Sunday afternoon, December 7, 1941. The instruction was given immediate study that afternoon and evening by Mr. Nufer and Mr. Smith and myself in order that I might talk with the Minister of State and his associates the following morning. The instruction, however, reached my desk just at the moment when we had the news of the Japanese attack on Hawaii and the Philippines. The Cuban Government, in accord with its traditional friendship with us, immediately began the preparations for a declaration of war on Japan and the steps growing out of it, I was therefore in constant touch with the higher Cuban authorities from the afternoon of December 7 until the evening of December 9. The various Ministers engaged in the trade agreement negotiations were under the necessity of being in the Congress and in Cabinet meetings all of December 8 and 9 until late in the night. It was, therefore, not until the morning of December 10 that we were able to meet and that I was able to discuss with them the supplementary trade agreement negotiations on the basis of the Department’s instruction of December 4.
I should like to note, however, that in fact no time was lost through this delay, as in view of the nature of the instructions with regard to the sugar note which is dependent upon the progress of legislation in the United States, it would have been impossible to reach any definite conclusions in this respect, and is not now, as we have nothing so far of a definite character which we can place before the Cubans. I am merely making this statement so that it may be clear that any delays which may be occurring now and which may be endangering the conclusion of the trade agreement and of the sugar purchase in time, before the end of this year, are not due to them.
I had a four-hour meeting on the morning of December 10 with the Minister of State, Dr. Cortina, the Prime Minister, Dr. Saladrigas, Dr. López Castro and the Minister of the Treasury, Dr. García Montes. I had suggested to the Minister of State that all these be present so as to facilitate their having all adequate background.[Page 215]
I first presented a memorandum in English and Spanish of which copies are transmitted in a separate despatch covering my instructions on sugar. I explained that legislative positions at home made it impossible for the Department to state that it could maintain the sugar note to Item 501 as we had last presented it. I went thoroughly into our legislative procedure and the background of our trade agreement legislation and explained the difficulties which arose out of our negotiating on sugar at the same time that Congress was considering legislation on the same subject. While I found adequate understanding of our legislative procedure and of the difficult situation created by the presentation of the Fulmer Bill,22 it is quite natural that the Cuban negotiators could not understand any recession from our position and from the note which we had offered them. I found them, however, entirely reasonable and we discussed in detail the two alternative procedures set forth in the Department’s instruction of December 4, and which I had given them in the memorandum above referred to. I think the Cubans would have been prepared to accept either of the two alternatives, but of course I was not in a position to present either of them in a final or definite form.
The Cuban negotiators were much disturbed over the uncertainty of the position and the dependency of the completion of the trade agreement and the sugar purchase on the pending legislation in the Congress. They fear that this uncertain legislative position may continue for some days so that it will not be possible to carry through the trade agreement and the purchase so that they will be effective at the end of this year. From the trade agreement viewpoint this is of primary importance as it would mean that otherwise the rate of 1.50 on sugar may become effective on January 1, 1942. This would be as undesirable for us as it would be a disaster for Cuba. Further, the sugar purchase can not be completed until the 15 points provided for in the trade agreement are certain. The completion of the sugar purchase is holding up the many arrangements which the sugar industry and mills must make for the grinding season, the opening of which is rapidly approaching. Now that this sugar purchase has been agreed to by the Cubans they can make no arrangements until they know that this agreement for the sale is accepted by both parties. There is, therefore, the greatest uncertainty here which amounts to anxiety.
Completely aside from the economic and commercial factors involved there is the psychological and political factor which I am sure the Department is keeping in mind. The Cuban Government declared war on Japan within 36 hours after we did. It has declared [Page 216] war on Italy and Germany in about 8 hours after we did. Although Cuba is practically defenseless and open to attack, the Cuban Government and people did not for one moment hesitate to support overwhelmingly these measures of full cooperation with us when larger and stronger of our neighbors have taken half-way measures or so far, none at all. Now that we have offered Cuba the 15 point reduction in the duty, and a minimum participation in our market (which has been the aspiration of Cuba for decades) and we have made arrangements for this sugar purchase, we can not let the Cubans down in any respect when their cooperation has been so complete.
Yesterday the President of Cuba gave instructions to the Cabinet that under no circumstances would Cuba refuse to carry through the sugar purchase on the terms last offered by their negotiators. After the proclamation of war by Japan and the almost certain position of imports from the Philippines and Hawaii that they will be nil, there was a tendency on the part of certain people here to influence the Government to draw back from the purchase and to ask for a higher price. President Batista said that they had made their promises before the war on the sugar purchase and now since the declaration of war by Cuba and the United States, Cuba must carry through her word no matter how disadvantageous the purchase might prove to Cuba. This is an indication of the spirit in which the Cuban Government is working and it is a spirit which must be recognized, I believe, in our negotiations of every character with Cuba, including the trade agreement. Not to do so would fail to take into account major political considerations at this time which are of the most primary and vital importance to us.
In view of the uncertainty in the legislative position and the necessity for arriving at some conclusion so that the trade agreement and the sugar purchase can be completed and effective before the end of the current year, the Cuban negotiators indicated that they would be prepared to have Mr. López Castro go to Washington at a moment’s notice with full powers to arrive at some arrangement which would make the signature of the agreement possible within the next few days. I said that I would be prepared to accompany Mr. López Castro, together with Mr. Gerald Smith of the Trade Agreement Division who is now in Habana. In telephone conversations with the Department I have emphasized the desirability of this trip as a measure to avoid possible failure of completion of negotiations and the sugar purchase in time. Mr. López Castro and I are prepared to leave Cuba by the first plane any day and unless legislative position is adequately cleared up today I strongly advise this course of action as the only one which offers hope of completing these important arrangements in time.[Page 217]
I discussed the various items, as instructed by the Department, with the Cuban negotiators.
The Cuban negotiators agreed to give the concession on tires and tubes which we requested if it was considered essential. I informed them that it was, under my instructions, essential and this concession may therefore be considered as granted.
With respect to rice, I submitted the last proposal of the Department informally in writing. The Cuban negotiators said that the rice market was ours any way and would be for years and they wanted it to be ours. On the other hand, if they went to the Congress with the trade agreement giving us the quota for 100,000,000 kilos, the Autenticos would offer such strong opposition to the agreement that it might destroy the agreement and they could not take this risk. I agree with them as to the danger and we can not insist on the concession in the form which we have asked. The Cubans have proposed as their final counter-proposal on rice a concession which would provide for a rate of duty to the United States of $1.50 per hundred kilograms, applicable to a tariff quota of 65,000,000 kilograms per year, with the rate of duty being unbound on excess-quota imports, but with the margin of preference being maintained at 50% on both quota and excess-quota shipments, and the concession to become effective at some future date following the termination of the present hostilities. I would suggest a period of a year. This, I am sure, is the best the Cubans can do and, knowing the situation as I do, I am sure that it is the best and the last offer they can make.
I strongly recommend our acceptance of this proposal. It protects our position adequately for it is extremely unlikely that the Cubans would raise the duty above 1.85 for any rice imports from the United States. If this proposal is not satisfactory to us, which I believe it should be, it would be better to drop rice from the negotiations. All of us here in the Embassy recommend the acceptance of the Cuban proposal as being in our interest.
I informed the Cubans that we were prepared to maintain our concession granted on leaf tobacco but that we would have to have a concession on smoking tobacco if the concession on cigars was to be maintained. I found on this matter a united front on the part of the Cuban negotiators, who stated that Cuba could make no concessions on cigarettes or smoking tobacco at this time. The Minister of State, for the Cuban negotiators, said that at the outset of the negotiations we had agreed to give the maximum concession we could on leaf tobacco and cigars and there was no mention of specific quid pro quo. The Cuban Government must insist on the granting of the maximum concession on leaf tobacco and cigars as essential to the completion of the agreement. They could not agree to make any concession [Page 218] on cigarettes or smoking tobacco. The tobacco industry in Cuba was in such a lamentable position that they could not go to Congress, which was considering a subsidy of the industry, with a reduction on either cigarettes or smoking tobacco. It was not a question of the amount of trade involved, it was the psychological factor on the second agricultural industry of Cuba. The Minister of State pointed out that at the outset of the negotiations the Cuban Government had indicated publicly that we were prepared to give the maximum concession on leaf tobacco and cigars without specific quid pro quo. It would be suicide for members of the Government to try to defend any other position before the Congress. I therefore strongly recommend that we maintain the maximum concession offered to the Cubans on leaf tobacco and cigars and withdraw our requests for cigarettes and smoking tobacco. It means nothing to us in reality.
In the matter of the seasonal period of concession on fresh United States vegetables except tomatoes and cabbage, I asked for the extension to November 30 in place of September 30 which had been offered previously by the Cubans. I was told that they could not possibly give the extension to November 30 but would do so up to October 31. They pointed out that certain Cuban vegetables came actively into the market during November and that it was impossible for them to extend the concession further than October 31.
I requested further the consideration of the concession on salt and was informed under no circumstances could this be considered or granted. There was excess production of salt in Cuba now and this was one concession which President Batista, for reasons already given the Department, would not grant. This Embassy thoroughly understands the Cuban position and the concession may be considered definitely refused.
I requested the concessions on shaving soaps and creams and toilet powders, as instructed by the Department and these were definitely refused on the ground that they [there?] were struggling industries here producing these articles and that no further concession could be made.
I requested the concession on industrial corn starch (Ex 108–A)—that is, a rate of 3.64 pesos per 100 kilograms which was granted.
I presented further the requests, as instructed by the Department, on Kraftboard, “Tocineta”, certain specified poultry feeds (269–G) and other feeds, n. s. p. f. (269–H) all of which were refused and in my opinion for good and adequate reason.
Although the Government of Cuba had given us a final offer on rice which I consider satisfactory, I raised further the items which I was instructed to raise in the Department’s instruction of December [Page 219] 4, 1941, if the rice concession was refused. That is, I took up the items on specified white corn products (Ex 256–C), specified livestock feeds (269–E), specified poultry feeds (269–G), rubber heels for shoes (307–B), canvas rubber footwear (307–D and 307–E) and articles of rubber, n. s. p. f., all of which were refused for what I believe were adequate and sufficient reason and I do not think we should raise them further.
We discussed the grapefruit notes and the Cuban Government indicated that they would not be able to meet requirements of the notes for the present and they therefore, renounced the concession offered on grapefruit, which may therefore be considered as eliminated from the negotiations.
I wish to emphasize that in granting the concession on tires and tubes the Cuban Government has made a very important concession for this means that one factory, ready to operate and a second almost ready to operate, will not be able to do so. The Cuban negotiators stated that they had verified that there was crude rubber to the value of $264,000 in warehouses here which had been brought in for these factories. The Cuban Government felt, however, that it should not foster the development of an uneconomic industry. The concession granted is an important one and shows the good faith of the Cuban Government in trying to grant concessions on manufactured articles which it believes should be imported by Cuba, as solely as possible, from the United States, even if it involves sacrifices in revenue.
I have cleared up all the points in the Department’s instruction of December 4, 1941, with the exception of the molasses concession which I was requested to withdraw. I did not take this up in the conversation yesterday as I did not wish further to complicate the situation with regard to the sugar purchase. I am giving this further study and hope to clear up this on the basis of the Department’s instruction under reference within the next 24 hours.
I know that the Department will be somewhat disappointed with the results which we were able to secure on certain concessions which I was asked to take up again. I wish to emphasize, however, that I believe that keeping in mind all the factors involved, we have the maximum of what we should ask.
This negotiation is one which is governed in many respects by major political factors and by considerations peculiar to American-Cuban relationships. It can not be considered on purely a commercial give-and-take basis and especially under the extraordinary circumstances prevailing at this time. If we consider that the concessions given by the Cubans are few we must bear in mind that, so far as the Cubans are concerned, they consider this supplementary negotiation as one [Page 220] to correct inequities which had grown out of the original trade agreement and its supplement. As I have indicated to the Department in previous reports, the trade agreement was under severe criticism in Cuba because of the disadvantageous manner, on the whole, in which it was working out for Cuba. There was grave danger that the Cuban Government might be under the necessity of revoking the agreement. The pressures to this end were to my knowledge serious, while the inequities which may have grown out of our trade agreement and its supplement were the result of circumstances over which neither we nor Cuba had any control. There was no doubt, however, that the agreement was working too strongly to our advantage.
I should like to repeat that it is in my opinion essential for the maintenance of American-Cuban relationships on the satisfactory basis they now have that we complete within the next week, so that it may become effective by the end of this year, a trade agreement which gives Cuba these 15 points reduction in the sugar duty and a minimum participation in our sugar market of not less than 28.60% of our consumption needs. Unless we take these major actions now and under the existing circumstances, and which we have led the Cubans to expect, we shall be introducing an element of uncertainty, distrust and complete disillusionment in our relationships with Cuba, which I believe will cause us in the end great trouble and more loss than to Cuba. I have tried to make this considered opinion of mine so clear to the Department that I do not believe it is necessary to reiterate it in more specific detail. I cannot, however, present this controlling factor to the Department with all the clarity possible because of this vital importance to us.
The major points and the details of this despatch were communicated to Mr. Hawkins, the Chief of the Division of Commercial Agreements, yesterday afternoon.
- To amend the Sugar Act of 1937 (50 Stat. 903), 55 Stat. 872.↩