Foreign Relations of the United States, 1948, The Western Hemisphere, Volume IX

710.J/4–748: Telegram

The Acting Secretary of State to the Embassy in Colombia

confidential

Washington, April 8, 1948—6 p. m.

Bogdel 57. For Smith.¹

Last year before 202(e) clause² was even conceived, Belt in discussion with officers Dept re preliminary sugar quota formula drafted by representatives U.S. sugar industry stated categorically that his Govt would impose import restrictions on American products such as radios, refrigerators, automobiles, and take other measures which would be detrimental U.S. commerce if sugar legislation considered unfair Cuba was enacted. (ReDelbog 42, April 7³) This was considered threat economic aggression and strengthened Dept’s conviction that some measure should be found to protect American interests, since it was evident Congress would not enact sugar quota legislation which Cubans considered fair. Sugar Act 1948 assures Cuba minimum 28.6% U.S. consumption requirements, but at normal consumption level Cuba receives larger share including 95% Philippine deficit. Belt, however, stated in note dated May 20, 1947⁴ that his Govt considered 53% U.S. consumption requirements fair and equitable share for Cuba.

Following Cuban laws are detrimental to American interests and might conceivably be interpreted as economic aggression:

a. Decree no. 5 of January 1947 requiring certain types cargo transported in railroad cars via car ferry vessels be unloaded and examined port of entry, is onerous measure adversely affecting Seatrain Lines, large American steamship company. Prior enactment this decree cargoes in cars were not cleared through Customs until arrival final destination. This decree therefore nullified through transportation feature for which seatrain service especially designed and forced company discontinue carrying cargoes subject discharge and examination port entry.

b. Decree no. 4504, Dec 18, 1947 prohibits termination agency contracts between foreign principals and Cuban agents except in certain instances and then only on approval Ministry of Labor, notwithstanding provisions existing contracts governing termination. This restrictive law in effect places U.S. firms in position of having their contractual relationship with Cuban agents under complete jurisdiction Minister of Labor. Protests U.S. Embassy have thus far been unavailing and there is no indication Cuban Govt intends rescind decree or even remove most objectionable features. Copy of decree together with interpretive comments being airmailed.

2. Belt in conversation with Armour on August 8, 1947 stated President Grau was entirely satisfied with Secretary’s letter August 8 to President Truman⁵ pointing out that 202(e) was not intended to substitute for or replace the orderly processes of settling differences including international arbitration. He said they would have liked the language to be little more specific but assured Armour they were not disposed question it and repeated they were entirely satisfied. When Armour expressed hope publication of Secretary’s letter would clarify situation and that Belt or his Govt would make this clear, Belt said he would see to it that Cuban Govt’s approval of action taken to clarify issue was made officially known both in Cuba and other American republics. Not only did Belt fail carry out this commitment, but few days later at Rio⁶ he made bitter dissertation on economic aggression which was obviously directed against U.S.

3. Million short tons Cuban raw sugar purchased by CCC in behalf of Army at 4 cents pound f.a.s. Cuban ports. World sugar price prior to opening negotiations between CCC and Cuban Govt reached low of 3.65 cents f.a.s. This large purchase Cuban surplus removed heavy burden from Cuban industry and Govt, helped solve sugar labor problem in face forthcoming elections and otherwise assisted in stabilizing Cuban economy.

4. In connection Cuba’s notorious record failure comply with international commitments you are ‘reminded of numerous violations U.S.-Cuban trade agreement and of consistent Cuban refusal to settle claims U.S. citizens adjudicated by Cuban courts. Repeated failure Cuban Govt over such long period to give effect to decisions rendered against it by Cuban courts is believed unprecedented in any country in the world.

Repeated to Habana by air pouch.

Lovett

1. H. Gerald Smith, Special Assistant to the Assistant Secretary of State for Economic Affairs (Thorp); Alternate Delegate, Ninth International Conference of American States, Bogotá, Colombia. March 30–May 2, 1948. For additional documentation on the Bogotá Conference, see pp. 1 ff.
2. Section 202(e) of the Sugar Act of 1948 provided that, whenever the Secretary found that any foreign country denied fair and equitable treatment to United States nationals, industries, commerce, or navigation and so notified the Secretary of Agriculture, the latter might withhold any increase in the United States sugar quota provided for that country over the quota allowed under the Sugar Act of 1937. A bill, S. 2511, “Repealing section 202(e) of the Sugar Act of 1948” was introduced in the United States Congress on April 19, 1948 and referred to the Senate Committee on Finance for consideration (837.61351/4–2148, telegram 428 to the Embassy in Cuba).

3. Not printed. In this telegram Mr. Smith requested: (1) Examples of action by the Cuban Government against United States interests which could be interpreted as economic aggression, to be used in connection with the forthcoming debate with Ambassador Belt (Chairman of the Cuban Delegation) on economic aggression; (2) any evidence that Belt had expressed himself as satisfied about the 1947 settlement of the 202(e) problem; and (3) brief details regarding the recent million-ton purchase Cuban sugar by the United States.

   On April 23 a Cuban proposal was introduced at the Bogotá Conference that an article be incorporated in the Charter and the economic agreement to the effect that no state should apply unilaterally against another state coercive measures of an economic, financial, or commercial character, even when the latter had refused to accede to its demands; see article 16 of the Charter of the Organization of American States, article 8 of the Economic Agreement of Bogotá, and, for further information, Ninth International Conference of American States, Bogotá, Colombia, March 30–May 2, 1948: Report of the Delegation of the United States of America with Related Documents (Department of State pub. 3263).

4. Not printed.
5. For memorandum of conversation, August 8, and telegram 394, August 8, 1947 transmitting text of the Secretary’s letter, see Foreign Relations, 1947, vol. viii, p. 622.
6. Inter-American Conference for the Maintenance of Continental Peace and Security, Quitandinha, Brazil, August 15–September 2, 1947.