The Cuban Minister of State ( Cortina ) to the American Ambassador in Cuba ( Messersmith )75



With regard to the proposal made by the “Defense Supplies Corporation”, an agency of the Administration of the United States of America, to the Republic of Cuba for the purchase of the sugar, certain amounts of invert molasses and blackstrap molasses which may be produced during the 1942 crop, this Government, accepting the viewpoint maintained by the American Commission in its conferences with the Cuban Commission of carrying out the proposed operation using wherever possible regular commercial channels, submitted the proposal originally made by Mr. Warren L. Pierson to the consideration of the Associations of Colonos and Hacendados of Cuba which are the entities which together officially represent the Cuban sugar industry.
The Government found it necessary in submitting the purchase proposal to them to inform them confidentially at the same time and in view of the relation thereto of the proposed reduction in the duties under paragraph 501 of the American Customs Tariff to 0.75 and of the principle on which is based the note to that paragraph proposed by the United States Government which reads as follows:

“No measure shall be made effective in the United States of America which would adversely affect the position of the Republic of Cuba as a supplier of sugar for the United States market as compared with its position under the provisions of the Sugar Act of 1937.”75a

The Government of the Republic of Cuba proceeded in the manner set forth, due to the fact that the Cuban Commission took into account in the course of the negotiations the conclusion of the additional agreement which is being negotiated between the Government of the Republic of Cuba and that of the United States of America in [Page 247] view of the importance to the Cuban sugar industry of the tariff modification under paragraph 501 and of the note referred to above.
Therefore both associations through their representative bodies considered carefully the proposal and the details of the proposed commercial agreement in so far as it refers to sugar. As a result of their study they informed the Government that in their opinion the basic minimum prices mentioned in the proposal were not satisfactory from a strictly commercial view point considering the increases which the sugar industry has had in its production costs and the profound crisis through which it has been passing. Nevertheless these associations recommended to the Government that the operation be accepted in principle envisaging the conclusion of the projected agreement under the conditions proposed which consists in the reduction of 15 points in the customs duties on sugar and guarantees for the future stability of the industry. They also took into consideration with a high sense of responsibility that the cordial relations and the mutual cooperation between our Republic and the Government of the United States must become closer every day.
Subsequently the Government of Cuba received from the Government of the United States a memorandum dated December 8, 194176 in which it indicated the possibility of being obliged to substitute the note to paragraph 501 referred to above by two other (notes) which would have different effects on the industry and of which the first would refer to the situation resulting from the Bill HR–598877 approved by the House and pending in the American Senate; and the second regulated the possibility of establishing customs quotas for Cuban sugar.
In as much as the sugar industry had accepted the operation on condition that the agreement would be signed under the conditions orginally submitted to it, the Government felt it necessary to make a confidential exploration through the Cuban Commission with the leading representatives of the industry in order to ascertain what the position of the Hacendados and Colonos would be with respect to the sale of the crop if, as a result of the notes mentioned, the provisions of the supplementary agreement which had originally been considered were modified. The Cuban Commission informed the Government that the new question which had been raised if formally proposed to the assemblies of the respective associations would result in a change in their attitude in the sense that they would request the withdrawal of the offer which they had recommended.
The difficulties faced by the American Government as set forth in the memorandum of December 8 in definitely inserting under paragraph 501 the note proposed by that Government appeared to have been obviated as a result of the resolution adopted by one of the Committees of the American Senate recommending the modification of the House bill in a way which will not adversely affect Cuba’s position as established by the sugar legislation of 1937.
On that assumption the Government of the Republic of Cuba can state that in principle and subject to the adjustments of the details natural in an operation of this kind, the proposal which it received from the “Defense Supplies Corporation” is acceptable, and would be formulated as soon as the supplementary trade agreement between the Governments of the Republic of Cuba and of the United States of America has been signed establishing the duties for sugar under paragraph 501 at 0.75 embodying therein the note proposed by the Government of the United States, as quoted in this memorandum or another similar (note) which might be made, based upon the same principle, if that were necessary, referring to the new sugar law approved by the American Congress, provided that law does not establish conditions less favorable for Cuba than those of the Sugar Act of 1937.
It is believed opportune at the same time to take this occasion to clarify the following points in the proposal of the “Defense Supplies Corporation”:
In as much as the operation envisages that the proposed supplementary trade agreement will be in effect, the basic minimum price for sugar would be 2.65 f. o. b. and 2.50 for molasses.
The proposal, doubtless due to an oversight, makes no reference to a point on which both Commissions were in agreement that the contract must contain a provision guaranteeing that Cuban refiners and other industries which enjoy a direct consumption quota in Cuba will be able to acquire the raws necessary for the manufacture of their share of such direct consumption sugars for exportation to the United States of America within the quota of 375,000 short tons of direct consumption sugars to which Cuba is entitled under legislation in effect in the United States.
Item c) of Section (7) of the proposal refers to gallons of alcohol and it should be understood that it refers to gallons of invert high-test molasses for the manufacture of alcohol. The Cuban Commission has indicated to the Government that the amount which it originally gave as tentative may be fixed at a maximum of 34,000,000 gallons of invert molasses.
The two cents’ freight referred to in Section (4) of the proposal would be the maximum deductible.
Certain clarifications must be made in Section (7) of the proposal.
The Government of the Republic of Cuba desires to state that, as was expressed by the Cuban Commission during the conferences in Washington, that the good faith of the American Administration is ample guarantee that any increase which domestic areas may need in the proceeds from their sugars will be made by increasing the ceiling price and not in the form of a subsidy or any other indirect assistance which does not, however, refer to the allocation of a global amount (misma cifra global) which the American Government may make in order to carry out certain policies of a social agrarian character. The statements made in the proposal that the appropriate agencies of the American Administration will do everything in their power to prevent increases in freight rates is likewise satisfactory to the Government of the Republic of Cuba.
If the conditions of acceptance contained in this memorandum are satisfactory to the “Defense Supplies Corporation” and as a result thereof the American Administration desires to modify the present ceiling price of 3.50 by increasing it, the Government of the Republic of Cuba would consider such an increase as an advance measure of the Government of the United States for the purpose of the proposed operation.
  1. Copy transmitted to the Department by the Ambassador in Cuba in his despatch No. 3104, December 14; received December 16.
  2. 50 Stat. 903.
  3. Not found in Department files.
  4. The Fulmer–O’Mahoney Sugar Bill which extended the Sugar Act of 1937. It passed the Senate on December 19, 1941; 55 Stat. 872.