811.20 Defense (M) Colombia/86: Telegram

The Secretary of State to the Ambassador in Colombia (Lane)

678. Your 761, June 6 and 773, June 8.

Provision that price shall be effective for 5 years is satisfactory; accordingly strike last sentence of Article 4 in draft forwarded. Price for equivalent of Upriver Acre Fine to be inserted in Article 4 has now been fixed at 45 cents. Brazil is being paid 39 cents, plus approximately 15%, half of which goes to Government to be used in development work and half to producers. Rubber Reserve prefers in Colombia to have entire price of 45 cents go to producers. Price for Castilloa rubber to be paid Colombia is substantially higher than Brazilian price; it is assumed Colombia will have no objection.
In principle there is every desire to meet Colombia’s wish for a tire plant. However, in addition to the shipping factor mentioned by you, there is problem of obtaining priority for any new machinery required, and, as pointed out in Department’s telegram 632 of May 30, it generally turns out that some new machinery of the highest priority is required. Preliminary studies indicate Colombia’s requirements can be furnished from Venezuela using existing capacity and shipped overland. It is hoped that execution of the rubber agreement does not have to wait a final answer to this question.
This Government is most anxious to provide for every expenditure reasonably designed to increase rubber production. However, it is impossible to give blanket approval to any specific project without further information. This question can best be handled by the Rubber Reserve representatives planning to go to Colombia after signature of the agreement.
This is another aspect of the problem of supplying Colombia’s indispensable requirements for rubber products. A study will be begun immediately as to its feasibility, but it is trusted that execution of the agreement will not be delayed.
This proposal is viewed sympathetically by the Department, and it will be referred to appropriate agencies for consideration.
While final decision not yet reached on request of Colombian Government for Brazilian tires, Department thinks it probably will be granted.