825.2542/3–551

Memorandum of Conversation, by Mr. Edmund E. Getzin of the Economic Resources and Security Staff, Office of International Trade Policy

Subject: Chilean Copper.

Participants: Mr. Fred Searles, Office Defense Mobilization
Mr. Richard Bissell,1 Economic Cooperation Administration
Mr. Frank Hayes, National Production Authority
Mr. Brown2ITP (State)
Mr. Atwood3OSA
Mr. Knox4ARA/E
Mr. Getzin—ER

Mr. Searles called the meeting to discuss certain proposals made by the Government of Chile with respect to copper. The substance of the Chilean proposals are: [Page 1259]

1.
That production of copper in Chile be increased.
2.
That Chile use a portion of the production for its own needs and for export to friendly countries other than the United States.
3.
That the price of copper be adjusted upward.
4.
That the United States eliminate the excise tax on imported copper.
5.
That study be given to a formula which would maintain the price of copper at a parity with the prices of things Chile must import.

The Chilean proposals were the subject of a letter from Assistant Secretary Thorp to Mr. Edwin Gibson, Deputy Defense Production Administrator, dated February 19, 19515 in which he asked for DPA to help formulate a U.S. position for discussion with the Chileans.

Mr. Searles began by saying that he was familiar with the proposals made by Chile, and that the Chileans should be told to submit their proposals to the International Materials Conference on Copper, Lead and Zinc.6 He suggested that in a broader forum the weight of opinion of other countries could be brought to bear on the Chileans in an effort to get them to withdraw some of their demands. He also suggested that countries receiving ECA assistance might be induced to “gang up” on the Chileans, and added that pressure should be brought on Chile since that country has been selling copper to the Soviet and its satellites. In connection with the Chilean request for a “set aside” of copper to be sold at higher than market prices, the question was raised as to whether or not such diversion was of particular concern to the United States. Mr. Searles replied by saying that, at the present the U.S. needed all the copper it could get, but that he was not too concerned if part of the Chilean production was sold elsewhere since, in that event, greater supplies would be available from other sources. This view was questioned by Mr. Bissell in the light of large unfilled European demands for copper. The following reviews were also expressed by the others:

1.
The United States could not refuse to talk to, nor could it refer to a multilateral conference, a mission appointed by the President of another country sent to the United States for the express purpose of talking bilaterally about matters of particular importance to that country.
2.
That some points made by Chile, such as the copper tax and increased production by United States companies, are clearly appropriate for bilateral discussions.
3.
The IMC has just got under way, and its activities will for sometime be confined to developing a statistical base for its deliberations. It would be difficult to interject specific problems on copper into the conference at this time. In the meanwhile, the Chilean Congress is to reconvene March 5 and has before it certain measures inimical to the interest of the United States copper companies. The opinion was also expressed that, if discussions with Chile were not carried out bilaterally and in good faith, Chile might well withdraw from the IMC.
4.
There is no evidence that Chile has sold copper to the Iron Curtain countries or that she has any intention of doing so. As a matter of fact, Chile’s record in preventing such shipments has been good.

Mr. Brown stressed the importance of intra United States discussions on the Chilean proposals before formal United States-Chilean talks, and pointed out the urgency of developing a United States position. Mr. Searles said Mr. Wilson7 would tell Mr. Acheson8 the U.S. position at the cabinet meeting. Mr. Brown reiterated his request for DPA representation to work with State and ECA to develop a U.S. position. Mr. Searles declined to designate someone. Mr. Searles then suggested that the Department representatives talk with the Chileans on the following day in an effort to find out exactly what they want. He intimated that his information on the proposals of the Chileans was at variance with that furnished to the Department. Mr. Brown then suggested that the information referred to be made available so that the Department’s representatives have the benefit of such information in their talks with the Chilean officials. Mr. Searles declined to divulge his information. (Note: Mr. Searies apparently had obtained a copy of the instruction9 from the President of Chile to Mr. Roberto Vergara. This paper has also been made available to the Department through Embassy Santiago.)

It was emphasized by State and agreed by ECA that regardless of where the Chilean proposals are discussed, it is essential that there be a unified United States position on each.

It was then agreed that the Department of State should talk to the Chileans on Friday, March 3 in an effort to ascertain their exact proposals. It was suggested that these proposals with the Department’s recommendation on each, should then be submitted to Mr. Edwin Gibson for referral to the Executive Committee of the Committee on Foreign Supplies and Requirements. The Department officials reiterated the Department’s request that representatives of the Defense [Page 1261]Production Administration and Economic Stabilization Agency be designated forthwith to develop the United States position prior to submission to the Executive Committee for approval. Representatives of DPA and ESA should also participate in formal discussions with the Chilean Mission.

In closing Mr. Searles said that the excise tax on imported copper was a block to maximum imports into the United States and stated that if this barrier did not have to be overcome, companies operating in Africa, with whom he is associated in private life, would be able to bring more copper to the United States. Why this was so was not explained since it is the current practice of importers to pass the tax on to the consumer. The latter now pay two cents over the domestic price for their supplies of foreign copper.

  1. Deputy Administrator, Economic Cooperation Administration.
  2. Winthrop G. Brown, Director, Office of International Trade Policy.
  3. Rollin S. Atwood, Deputy Director, Office of South American Affairs.
  4. Charles F. Knox, Jr., Consul General, Curacao. Mr. Knox, who had served as adviser on American Republics economic development in 1945, was temporarily detailed to the Department of State from January 23 to April 27, 1951.
  5. Not printed.
  6. The Copper, Lead and Zinc Committee was one of the commodity committees established through the initiative of the United States, Great Britain, and France early in 1951. These committees collectively constituted the International Materials Conference (IMC); they were charged with reviewing the international supply position for scarce raw materials, and with recommending to governments measures for insuring equitable distribution. For additional information on the origins and development of the IMC, see Willis C. Armstrong (Acting Special Assistant, Office of International Materials Policy), “The International Materials Conference,” Department of State Bulletin, July 2, 1951, pp. 23–30.
  7. Charles Edward Wilson, Director, Office of Defense Mobilization.
  8. Dean G. Acheson, Secretary of State.
  9. A copy of a memorandum containing instructions from President González Videla to Señor Vergara, a member of the Chilean Copper Commission, dated February 12, 1951, was transmitted to the Department of State under cover of despatch 843, from Santiago, February 21, 1951, not printed (825.2542/2–2151).