Foreign Relations of the United States, 1949, The United Nations; The Western Hemisphere, Volume II

837.61351/9–2249

The Ambassador in Cuba (Butler) to the Secretary of State

confidential

Habana, September 22, 1949.

No. 721

Sir: I have the honor to enclose a memorandum of a recent conversation between officers of the Embassy and Dr. Arturo Mañas, Secretary of the Sugar Mill Owners Association. Dr. Mañas’ reason for introducing into his conversation statements emphasizing the necessity for Cuba to seek revision of its policy concerning relations with the United States was inspired by developments during the recent conference of GATT Contracting Parties at Annecy.

From this conversation with Dr. Mañas, and from other sources, it is clear that Cubans familiar with our position at Annecy regarding tariff preferences and the overwhelming defeat of the Cuban thesis on that subject¹ have been somewhat stunned by the realization that the United States is in earnest in proposing to reduce and eventually to eliminate the exclusive tariff treatment that has applied to Cuban-American trade for many years. It will be recalled that during the Habana Conference (November 1947 to March 1948), Cuba for the first time felt called upon vigorously to defend publicly the special tariff arrangements it has enjoyed with the United States since the Republic was established; and realization that those who favor whittling away such special privileges have been joined by the United States (while willing itself to forego special treatment accorded under exclusive agreements), has served to point up to Cubans the imminence of the change in policy that is envisaged in the General Agreement to which their country is signatory. The bitterness of this realization has been accentuated by the proposal that such changes in exclusive tariff treatment can be made without Cuba’s consent.

As to sugar, well-informed Cubans are well aware that Cuba’s advantage in the American sugar market is derived almost entirely from the Sugar Act quotas (but in whose determination Cuba has no voice); and while at times they have been prone to belittle the advantages to the Cuban sugar industry of recent reductions in the rate of duty on Cuban sugar, as occasion seemed to require, they have vociferously objected to any diminution in the margin of preference on the ground that this constitutes an intangible asset of psychological and even economic importance to Cuba. Under the circumstances it is quite evident that Cuba fears, for reasons whose actual validity it seemingly has difficulty in clearly establishing, any change in the present margin of preference on sugar. The possible decrease in or elimination of this margin serves to emphasize the real importance of Cuba’s quota share in the American sugar market, and has stimulated a search for a formula that will enable Cuba to participate in determining that share on a long-term basis. The formula Dr. Mañas has proposed has obvious advantages to Cuba, and to his satisfaction he has demonstrated that it is feasible from a legal point of view, but does not presume to appraise its practicability on any other important basis.

The Cuban thesis presented at Annecy regarding changes in preferential margins apparently was developed by Dr. Guillermo Alamilla, a law partner of Dr. Mañas, whose firm specializes in matters pertaining to the Cuban sugar industry. Some significance, therefore, is attached to the view of Dr. Mañas set forth in the enclosure, as indicating possible Cuban Government strategy in another effort to tie Cuban sugar quotas to the settlement of some of our long-standing problems with Cuba, and specifically certain provisions of the proposed Convention of Establishment and Economic Cooperation.² In fact, it will be recalled that in his first approach to a proposed convention of that nature, the Minister of State emphasized, among many other matters, the desire of the Cuban Government to include the “stabilization” of the Cuban sugar industry. The tenor of Dr. Mañas’ remarks would indicate that that approach to a treaty by the Cuban Government will have the support of leaders in the Cuban sugar industry.

Characteristically, this approach places emphasis predominantly upon sugar, with none upon industrial or agricultural diversification and expansion and the means to foster and accomplish such progress—such as the elimination of ever-increasing barriers to private foreign investments. The latter is quite as important from the standpoint of sound, long-term economic policy as is sugar—and it is a matter in which we conceivably are as deeply interested from the standpoint of Cuban economic progress and political equilibrium. On the basis of past experience, however, it is not felt that Dr. Mañas can be relied upon to contribute much to the development of a program not related closely to sugar; and while he expressed interest in exploring the subject further upon his return from the London Sugar Conference, it is expected that any additional views will be refinements of the general theme he has already expounded.

Respectfully yours,

For the Ambassador:

Harold S. Tewell

Counselor of Embassy

[Enclosure]

Memorandum of Conversation

confidential

Habana [undated].

Reference is made to a memorandum of conversation concerning Cuban sugar problems which took place September 15 between Dr. Arturo Mañas on the one hand and Messrs. Elbrick,³ Tewell, and Nolan⁴ on the other, which memorandum was transmitted to the Department under cover of Confidential despatch no. 705, September 16, 1949.⁵

Toward the close of the conversation referred to above, Dr. Mañas mentioned the outcome of the recent GATT discussions at Annecy, and proceeded to dilate lengthily and emphatically upon the implication of these discussions as regards Cuba’s future relations with the United States.

Mañas began by stating that the attitude which the United States delegation assumed at Annecy with regard to United States tariff preferences on Cuban products has forced Cuba to conclude that the bases of its economic and political relations with the United States must be revised completely. The new bases of these future relations, he emphasized, should certainly be a long-term, across-the-board executive agreement between the Cuban and American Governments settling all outstanding problems, while simultaneously guaranteeing Cuba’s tariff preferentials and sugar quota in the United States. He failed to mention the size of sugar quota desired and admitted that the sugar preferential had political significance only, but he maintained that if the United States really desires an agreement regarding the entry of Americans into Cuba to work, the local operation of American banks, et cetera, it can (in his opinion) be secured only in the above-mentioned way.

Mañas admitted outspokenly he had no patience whatsoever with the frequently-advanced legal argument that the United States Constitution precludes our President from entering into such an executive agreement without Congressional sanction. He pointed out that while the United States Senate has to approve all treaties by a two-thirds vote of the Senators present, it does not have to approve executive agreements such as he has in mind, and that decisions of the Supreme Court have amply confirmed and approved this executive prerogative. He has not prepared a written legal opinion on this subject, but he stated that the Department of State in Washington had prepared an excellent one some time ago in connection with the St. Lawrence Waterway Project.⁶ As a further example of the type of thing he had in mind, he also referred to an exchange of letters (December 23, 1941⁷) between United States Ambassador Messersmith and Cuban Minister of State Cortina, in which the statement was made that the United States would “take at all times every appropriate and possible effort to safeguard” Cuba’s position in the United States sugar market. Mañas amplified his thesis further by stating that should the United States Congress subsequently enact legislation contrary to such an executive agreement, the Executive would be obligated to veto such legislation, and that if the law annulling the agreement were passed over the Presidential veto, the Executive accordingly would be relieved of any obligations under the agreement. According to Mafias, however, the Cubans would be willing to accept this calculated risk.

At this juncture in the conversation, Mr. Tewell noted that Mañas’ observations in regard to an executive agreement were wholly legal and took no cognizance of political factors that our Presidents always have to bear in mind in such cases. In reply Mañas stated there is no reason to believe that the United States cane and beet interests affected by a long-term sugar arrangement with Cuba would prevent the negotiation of such an agreement. In Mañas’ opinion, President Truman could swing such an agreement politically, because, once its terms became known, it would contain some concessions for certain United States interests which would assist in putting it across.

Once Mañas had outlined his legal and political arguments in support of such an agreement, the Embassy officials let it be known they did not concur with his observations in all respects. They pointed out that, while it is true (as Mañas affirmed) that the Supreme Court has confirmed the power of the President to conclude executive agreements in a number of specific instances, this power broadly speaking is still in the twilight zone of executive action and not so well defined legally but that it might easily become a subject of legal debate (more particularly when such an agreement involves sugar quotas on which Congress has legislated), and give rise to possible charges of Executive usurpation of Congressional function.

In reply to Mañas allegation that United States cane and beet interests probably could not prevent the execution of such an agreement, Mr. Tewell pointed out such an assumption might be entirely wrong, particularly in view of the overwhelming support which the agricultural sections of the United States gave the present Administration in the last election; and that this angle of the situation would be appreciated by President Prío, who faces a similar problem with regard to sugar wages in his desire to retain the support of the highly-organized sugar workers.

In passing, Mr. Tewell also called attention to another possible reason why it might be difficult for such an agreement as Mañas proposed to be accepted politically in the United States: Cuba’s long record of failure to live up to its previous agreements with the United States and to pay the large amount of claims owing American citizens which have been adjudicated by Cuban courts, despite the fact that the previous Cuban administration had enjoyed unprecedented revenues running up to 300 million dollars annually. Mr. Tewell pointed to the possibility that many Americans in influential circles might feel that another long-term United States agreement with Cuba would meet the same fate.

Mañas listened carefully to these observations and agreed they merited consideration. Any problems related thereto, he felt, would have to be worked out by the two countries in a spirit of friendship and compromise. He insisted, however, that should the conclusion be reached on political grounds that such a long-term executive agreement is inexpedient, no basis would then exist on which the United States and Cuba could get together to reorganize their economic and political relations.

In conclusion, Mañas stated that such an agreement is Cuba’s “only hope”, that it has been discussed with President Prío, and that the latter looks upon it with favor. Mafias feels that with President Truman’s friendly feeling for Prío and with Ambassador Butler’s friendship for Cuba, this is perhaps the most opportune occasion Cuba will ever have to revamp its relations with the United States in such a satisfactory way. Mañas feels further, however, that Prío is too weak and dilatory to take advantage of this opportunity and that he will let it pass unrealized.

• C. Burke Elbrick
• Harold S. Tewell
• Louis C. Nolan

1. At Annecy, the Cuban delegation had taken the position that the tariff preferences which Cuba enjoyed in the United States by virtue of the GATT could not be reduced or eliminated by the United States without the Príor consent of the Cuban Government. The United States took the position that, if this were so, Cuban consent would be necessary for any concession made by the United States to another contracting party at Annecy if the concession touched upon the Cuban preferences; the United States further maintained that the purpose of the GATT was to reduce trade barriers and preferences. The issue was referred to the contracting parties which upheld the U. S. position by a vote of 14 to 1, after which the Cuban delegation withdrew from the session. The contracting parties then invited both countries to resolve the problem in bilateral negotiations. (See Department of State Bulletin, November 21, 1949, p. 776.)
2. Agreement was not reached during 1949 by the United States and Cuba on the proposed Convention.
3. C. Burke Elbrick, Counselor of Embassy in Cuba.
4. Louis C. Nolan, Attaché at the Embassy in Cuba.
5. Not printed.
6. See Foreign Relations, 1941, vol. iii, pp. 157–159.
7. Not printed, but see ibid., vol. vii, p. 246.