846E.2395/7–251: Telegram

The Secretary of State to the Embassy in Ceylon 1


1. Urtel 665 June 27,2 Dept and GSA today held first discussion with Corea re possibility contract for purchase rubber. This mtg for purpose presenting proposal and discuss procedure which GOC might prefer in subsequent discussion. If desirable, contract might be concluded Colombo. US indicated fol: (1) US desires establish pattern and flow rubber from Ceylon. (2) Prefer usual commercial channels but will consider govt to govt. Using commercial channels wld encourage continuation pattern after US Govt purchases cease. If US Govt purchases cease prior expiration contract, transfer of contract to industry wld be arranged. (3) Twelve-eighteen month period offered. (4) Contract for about 4,000 tons monthly but at Corea’s suggestion US indicated wld consider some increase. This quantity about 40 percent Ceylon production and usual US take. Wld not take all production as Corea proposed. (5) Price suggested is market price computed as average price in month preceding or in month of delivery. This device desired avoid speculative market on day of delivery. US prefers average Singapore market prices. (6) Interested all KMA types. (7) Willing explore possible contracts other Ceylon products. Possibility graphite contract mentioned.

Corea pressed for US purchase total production to stabilize market and avoid need licensing, but thought it possible reactivate Ceylon agency to handle smaller contract through agreement with shippers. Will contact GOC before continuing discussions. Will consider discussion contracts other commodities (copra) in addition rubber. Also expressed hope for long-term fixed price contract.

Dept will keep Emb informed. Emb comments desired.

  1. Repeated for information to London as telegram 34.
  2. Telegram 665 from Colombo, June 27, not printed, stated in part the Embassy’s view that it was desirable to commence discussions in Washington on the proposed rubber contract (846E.2395/6–2751).