Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

414.119/10–1452

Memorandum of Conversation, by the Acting Officer in Charge of Central America and Panama Affairs (Clark)

secret

[Washington,] October 14, 1952.

Subject:

• Export Control Policy Toward Guatemala

• Participants: Rudolf E. Schoenfeld, Ambassador to Guatemala
• AR—Mr. David Clark
• MID—Mr. Neal¹
  • Mr. Edward Clark
• Department of Commerce
  • Mr. George Wythe
  • Mr. Bernard Cahill²
  • Mr. William Rafferty
  • Mr. Brooks Ryno
  • Mr. John Shepard³

Mr. Edward Clark said that the meeting had been called to review the situation as respects our current export control policy toward Guatemala. He noted that the Department of Commerce had recently raised the question of whether it was advisable to continue the present policy in view of changing circumstances in the supply situation and recalled that in informal discussions between officials of the Department of State and the Department of Commerce it had been agreed to postpone any final decision pending the opportunity to discuss the matter with Ambassador Schoenfeld. Ambassador Schoenfeld had been advised informally before he had left Guatemala for Washington of the views of the Department of Commerce in this regard in order to enable him to have the opportunity of reviewing the matter with his staff prior to discussion in the Department.

Speaking for the Department of Commerce, Mr. Wythe outlined Commerce’s position substantially as follows. The supply situation in general was rapidly improving as a result of which there were less and less items over which the Department of Commerce could appropriately exercise licensing control. In view of this easing supply situation it was becoming more and more difficult to turn down or even delay the issuance of export licenses. The pressure from U.S. exporters was mounting and, since they were fully informed as to the supply situation, it was impossible to deny or delay licensing without openly admitting that we were engaging in a restrictive policy as regards exports to Guatemala. Finally, U.S. exporters were complaining that competition from Europe was increasing rapidly, thus threatening U.S. markets in Guatemala and elsewhere in Latin America.

In view of the supply situation and pressure from U.S. exporters there were now few items over which any effective control could be exercised by OIT. The policy of refraining from granting priority assistance could, of course, be continued and some pressure could be brought in the case of materials under quantitative quota restriction. In this category were such commodities as steel, copper and copper sulphate and sulphur. However, in view of the limited control that OIT could now exercise over exports to Guatemala, the Department of Commerce wondered whether it was worthwhile to continue the present policy.

Ambassador Schoenfeld stated that in his judgment the present policy should be continued for the time being. He said that the policy had been effective thus far. The objective had been to bring the Guatemalans to a realization that they were dependent upon the United States and that if they expected assistance or consideration from the United States it behooved them to adjust their actions vis-à-vis the United States accordingly. The Guatemalans were now aware of this, he thought, and to illustrate this he pointed to the fact that President Arbenz had specifically requested him to use his good offices to assist the Guatemalans in obtaining road building equipment for the Atlantic Highway and that Ambassador Toriello in his call on President Truman⁴ and later on Mr. Miller⁵ had made a similar request of these two officials. There were now, he said, certain beginning signs that the Guatemalan Government might be preparing to make some adjustments in its policies as they affected the U.S. Our export policy had played an important part in bringing this situation about and could continue, he thought, to influence it in the right direction.

The Ambassador said that he understood the difficult position Commerce found itself in, especially from the point of view of pressure from U.S. exporters, and said that of course careful attention should be paid to the trade situation to make sure that our policies did not result in a loss of the Guatemalan market for U.S. business through competition from Europe or elsewhere. However, he thought it would be advisable and desirable for certain political reasons, as well as for the effect it is producing on the thinking of Guatemalan officials, for this Government to continue our present policy even though our area of effectiveness was being sharply reduced by the supply situation.

The question was raised as to whether exceptions should be made in our policy in the case of materials over which there were still quantitative quota restrictions to accommodate U.S. companies such as the United Fruit Company. Specifically, it was stated that the United Fruit Company had requested an increased amount over and above the present quota level of copper sulphate used for spraying banana trees. Ambassador Schoenfeld expressed the view that our policy should not be implemented in such a way as to penalize the operations of U.S. companies. This view met with general concurrence.

After some further discussion it was agreed that the present policy of controls over exports to Guatemala, in so far as the supply situation permitted, should be continued. Specifically, it was agreed that 1) no priority assistance would be granted to Guatemala under prevailing circumstances; 2) quotas on materials under quantitative quota restrictions would continue to be cut back; and 3) as regards the export of materials not under quantitative restrictions the Department of Commerce would continue to consult the Department of State and the Embassy whenever there were any unusual items which might provide leverage. In particular, all applications for export to the Guatemalan Government or agencies thereof would be subjected to special scrutiny and brought to the attention of the Department and the Embassy.

1. Jack D. Neal, Deputy Director, Office of Middle American Affairs.
2. Bernard J. Cahill, Assistant for Foreign Requirements, American Republics Division, Office of International Trade, Bureau of Foreign and Domestic Commerce.
3. Program Officer, Strategic Controls Division, Office of International Trade, Bureau of Foreign and Domestic Commerce.
4. Apparent reference to the occasion when Ambassador Toriello presented his credentials; no other memorandum of a conversation between President Truman and the Ambassador during late September or early October was found in Department of State files.
5. Apparent reference to Ambassador Toriello’s courtesy call on Assistant Secretary Miller on Oct. 6; the memorandum of their conversation is printed supra.