811.5017/2–146: Telegram

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

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103. Press reports from US during the past few weeks on coffee situation have indicated that subsidy will probably be discontinued as soon as the six million bags have been purchased and shipped and that there will probably be no immediate rise or abandonment by OPA of present coffee ceiling prices. The resentment and dissatisfaction that is developing in Colombia over this prospect is so widespread and is so thoroughly permeating Colombian attitudes and thinking that if realized, it cannot fail to have a very disturbing effect on Colombian-American relations.

I believe that it has now become essential for maintenance of good relations that there should be a prompt modification in the coffee price policy of OPA. The old arguments are no longer valid here. The Colombian public was previously made to understand that coffee ceilings had to be maintained to prevent general and ruinous inflation in US, that once the roof was lifted there would be no way to hold the inflationary spiral. Yet for weeks the press has been feeding its readers with accounts of authorized or projected price and wage increases in US until they have become convinced that coffee is one of few products that OPA inflexibly refuses to release. In view of other known price advances, no reason can be seen here why coffee prices cannot be increased also without necessarily endangering OPA’s entire program.

The continuation of an inflexible policy as applied to an imported produce such as green coffee will increasingly be considered here as an abuse of good-neighbor policy and of the particularly close and friendly relations between Colombia and US. Colombia is in great need of materials, equipment and machinery from US but is now faced with unpleasant prospect of paying more for these purchases while being denied a better price for its principal export product. This [Page 155] situation is rapidly becoming intolerable to business men and coffee producers alike.

The interests of US in expanding export markets and world trade and in eliminating trade barriers are certainly being prejudiced by, and appear to be entirely inconsistent with, the continuation of previously established price ceilings on coffee especially now that relaxation is occurring on so many other items.

It may be expected that if present subsidies are withdrawn and there is no increase or removal of ceilings that much of the good will that has developed in Colombia for US will be lost and that this market for US export merchandise will become more vulnerable to competition from other exporting countries.

As seen from here, it would be preferable if ceilings were now removed entirely providing producing countries would not artificially obstruct exports or sales to the US. Otherwise, either the continuation of subsidies or an increase in the present ceilings is imperative.

Repeated to Rio de Janeiro.

Wiley