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

OAS files, lot 60 D 665, “Post-conference—delegation report”

Report Prepared in the Department of State¹

confidential

[Washington,] April 1954.

Introduction

committee ii—(economic matters)

The United States Delegation went to Caracas with the primary objective of obtaining a ringing hemispheric declaration against encroachments of Soviet communism.

Most of the Latin American Delegations went to Caracas chiefly interested in economic problems.

The Conference produced the desired anti-communist resolution, but the Latin American countries fell short of their full objectives of firm commitments by the United States on key economic issues.

The Latin Americans evidently realized before the Conference that the United States would be unwilling at Caracas or at least not ready, to accede to their full economic desires. The lead-off speaker in the general economic debate, Prat of Chile, proposed a special meeting of Ministers of Finance or Economy at which “concrete” solutions of Latin American economic problems would be achieved. This idea was generally supported, and the subsequent tactics by a number of delegations were to obtain the maximum possible at Caracas and still have a commitment for another meeting which would offer a further opportunity to press for additional and, it was hoped, more firm concessions by the U.S. The possibility existed, near the beginning of the Conference, of adopting a few perfunctory economic resolutions and postponing to the special economic meeting, action on the issues of major concern to most of the Latin American countries. This opening was not exploited, however, and in retrospect it was probably as well that the issues in dispute were debated and brought into clearer focus than ever before.

It may be anticipated that at Rio there will be additional pressure for specific and concrete commitments by the U.S., based on the premise—which is not new—that if there is unity in the Western Hemisphere militarily and politically, this should also extend to the economic field.

In its preparations for the Conference, the U.S. had anticipated all proposals of any importance which were eventually presented. What was not fully anticipated, however, was the extent to which some of the Latin American Delegations would go in pressing certain of their proposals to points which could not be accepted by the U.S.

At no previous Inter-American Conference did the Latin American Delegations come so well prepared with statements of economic problems and aspirations of their countries. Delegate after delegate presented lengthy and in many cases well-prepared documents; in fact, the beginning of subcommittee work was delayed for several days beyond the normal period of “general debate” in order to permit the delegates to conclude their presentations. In much of this was evident the work during the past three years of the secretariat of the United Nations Economic Commission for Latin America, under the direction of Raul Prebisch. The various Latin American countries had available from ECLA a very considerable number of studies of their economic problems on which they could draw for material, and in many cases the delegates had picked up technical economic jargon learned from Prebisch.

Latin American Positions

From their prepared statements, from the resolutions introduced and from the debates in Committee II and its subcommittees, it was clear that most of the Latin American Delegations had come to Caracas with the intention of getting the United States committed as far as possible at that meeting, to action in their favor on three main issues and several related or subsidiary issues. The three main issues were: more “favorable” terms of trade, through the guaranteeing in some unspecified way of high and stable prices for Latin American exports of raw materials to the United States; unilateral lowering of U.S. tariffs on Latin American products and no other form of trade restriction; and greater liberality in the granting of loans of public funds for economic development in Latin America, both as to amounts and methods of making the loans.

At the same time, it was recognized that on certain matters of importance to a few or many of the Latin American nations, the U.S. was not yet prepared to state a definitive position, e.g., disposal of agricultural surpluses. Combined with the drive at Caracas for resolutions at the Conference itself, which in some cases the United States could not support or had to vote against, therefore, there was the move—supported by the U.S.—for a special economic meeting in the last quarter of 1954 in Rio de Janeiro at which issues unresolved, or only partially resolved, at Caracas, could be further discussed. Support by the U.S., it should be noted, was partially related to our concern as to the outcome of the US-sponsored declaration against communism, which at the time of the discussion of the proposed special economic meeting, had not yet been voted upon in Committee I.

Several common themes ran through many of the Latin American statements and were reflected in the resolutions² introduced: higher and more stable prices for raw material exports; the need for assurances that prices for such exports would bear a favorable relationship to prices of imported manufactures; the need for unilateral action by the U.S. to lower duties on imports of Latin American products; the need for a more liberal policy in loans of public funds for economic development; the preference for the Export–Import Bank over the International Bank for Reconstruction and Development as a source for credits for development; strengthening and expansion, on a permanent basis, of the technical cooperation programs; improving and strengthening the operations of the Inter-American Economic and Social Council and coordinating its work more effectively with that of the United Nations Economic Commission for Latin America.

Individual country representatives, of course, had particular objectives: the Chileans wanted a special conference to pin down the U.S. on economic commitments; and compensation for alleged losses because their copper was not being sold behind the Iron Curtain. The Guatemalans wanted a resolution which under the misnomer of “agrarian reform” would serve them as a springboard for further land expropriation action against the United Fruit Company. The Bolivians also had a proposal on that subject. The Mexicans, Chileans and Bolivians wanted a special inter-American agency to concern itself with problems of tin, lead, zinc, copper and tungsten. The Dominicans wanted something which could be used as a basis for a larger quota in the U.S. sugar market. The Ecuadorans wanted a resolution which would give them the right to expand their claims to sovereignty over their non-existent Continental Shelf and the waters above it to a distance of 200 miles offshore. The Panamanians wanted a resolution in favor of abolishing the tax presently imposed by the U.S. on air, maritime and land passages in Central America and the Caribbean. The Argentines and Uruguayans particularly wanted assurances against disposal of U.S. agricultural surpluses in a manner harmful to their export markets. The Brazilians and Peruvians wanted prior inter-American economic resolutions to be codified, with the former desiring that the resulting document be considered at a special conference. The Peruvians wanted resolutions in favor of private enterprise (also the Panamanians) and the encouragement of private foreign investments. The Guatemalans wanted private foreign investments “regulated”, and in general limited to less than 50 percent of the ownership of an enterprise. The Uruguayans (and the Dominicans in a less ambitious way) wanted a regional preferential trading system even within the GATT structure.³

Venezuela and Cuba and later Chile, tried to obtain acceptance of the thesis that income from private foreign investments should be taxed only in the country in which the income was created. Venezuela also wanted assurances that foreign capital would not displace existing national capital. Ecuador proposed a study of the possible creation of an Inter-American Institute of Technological Research, and Chile had a somewhat similar idea. Guatemala introduced resolutions against economic boycotts and monopolies, aimed at the United States or U.S. companies.

United States Position

The official U.S. position on economic matters at Caracas was set forth in one part of the Secretary’s address on March 4 before a Plenary Session; in a statement by the Secretary before the Economic Committee on March 10; and in the main economic statement on the same day before that Committee by Assistant Secretary Waugh.⁴

Where applicable, the position outlined in those statements was of course maintained in the debates in the Economic Committee and its subcommittees.

The U.S. position was such that an area of complete agreement with the other countries could be found in such subjects as technical cooperation; the future work of the Inter-American Economic and Social Council and its relations with the United Nations Economic Commission for Latin America; and a measure of agreement on economic development, including private investments, public credits and economic diversification.

It was in that part of the agenda headed “commercial cooperation” that it was not possible to find an accommodation on two issues of importance. Thus, for the first time at an inter-American conference, the U.S. was forced to vote against a resolution bearing the title “Reduction of Barriers to Inter-American Trade”.⁵ The problem in the case of this resolution, however, was that it was entirely unilateral, calling upon the U.S. (not identified by name) to reduce or eliminate trade barriers against Latin American raw materials or semi-manufactures, without any reciprocal action by the Latin American countries.

In the same way, such a vigorous case was made by many of the Latin American countries for practically guaranteed assurances of favorable terms of trade, that the language adopted to express this in a resolution (“Terms of Trade and Prices”),⁶ even though considerably watered down, could not be accepted by the U.S. because of its implications.

In the case of three economic resolutions, the U.S. Delegation found it necessary to abstain. One of these was on “Agricultural Surpluses”,⁷ and although the U.S. group was entirely sympathetic with the concern expressed particularly by Argentina and Uruguay—that U.S. agricultural surpluses might be disposed of in a manner harmful to normal marketings by those countries—and even though the delegations of those countries had attempted to frame their resolutions in a way which would prove acceptable to the U.S., it was decided that in view of the fluid nature of the problem at the present time and the fact that it was under study in both the Executive and Congress in Washington, it would be necessary to abstain.

In another resolution,⁸ offered by Panama and proposing the removal of the tax imposed by the U.S. on tickets for travel to Central America and the Caribbean, it was recognized by the U.S. group that the tax did in fact discriminate against a particular area, but as the Delegation had no authority to vote in favor of the removal of the tax, and tax matters were at the moment under consideration in the Congress, it was again necessary to abstain.

On the subject of agrarian reform both Guatemala and Bolivia had introduced resolutions which, however, had not been discussed until the last meeting of Committee II. As the work of the Committee was about to be concluded, there was presented a Guatemalan-Bolivian combined draft which had not been seen by any of the other Delegations. Placed in discussion, it immediately produced numerous oral proposals for amendment, and the U.S. Delegation, by way of amendment, introduced an entirely new draft. After some three hours of debate, the Chairman finally asked the delegates to consider a proposal which attempted to combine the Guatemalan and U.S. drafts, with the elimination of a number of the more obnoxious phrases from the Guatemalan. This was eventually approved,⁹ with not too many of the delegates exactly sure of the text on which they were voting. When a clean text became available, it was seen that the Guatemalan had been able to maintain his central idea of land distribution as the sole basis for agrarian reform. In the Plenary Session, dealing with economic resolutions, therefore, the U.S. Delegate announced his abstention and read a statement explaining that although the U.S. would support proposals for agrarian reform in its broad sense, it could not support a resolution based on the single and narrow concept of land distribution. Peru joined in this abstention, with all other votes cast in favor of the resolution.

Beyond the issues described above, the only other coming before the full Economic Committee which gave rise to any extended debate was that of conservation of natural resources: the continental shelf. This grew out of a resolution introduced by Ecuador, and was debated in the full Committee and a working group. There were wide differences between the Ecuadoran proposal and the position of the U.S.¹⁰ and several other Delegations, with the result finally an agreement that the issues should be discussed at a special conference in 1955.

[Here follows discussion of the deliberations in the economic subcommittees.]

1. Cover sheet and table of contents are not printed.
2. Draft resolutions as submitted to the Tenth Inter-American Conference are printed in Décima Conferencia Interamericana: Actos y documentos, vols, ii–iv; translations of a few resolutions originally submitted in Spanish, Portuguese, or French are contained in OAS files, lot 60 D 665.
3. Reference is to the structure for international trade cooperation developed in pursuance of the General Agreement on Tariffs and Trade, concluded at Geneva, Oct. 30, 1947, and entered into force for the United States, Jan. 1, 1948; for text, see TIAS No. 1700 or 62 Stat. (pts. 5 and 6). For documentation relating to GATT, see volume i .
4. For text of the referenced addresses by Secretary Dulles and Assistant Secretary Waugh, respectively, see USDel Report, pp. 43–51, 65–67, and 67–72, or Department of State Bulletin, Mar. 15, 1954, pp. 379–383; and ibid., Mar. 22, 1954, pp. 426–429.
5. For text of the referenced resolution, approved as Resolution LXVIII (“Reduction of Restrictions on Inter-American Trade”), see USDel Report, p. 135.
6. Reference is to Resolution LXXVI; for text, see ibid., p. 139.
7. Reference is to Resolution LXXVII; for text, see ibid., p. 140.
8. Reference is to Resolution LXXXV; for text, see ibid.
9. As Resolution LXXIV (“Agrarian Reform and Economic Development”); for text, see USDel Report, p. 137.
10. The position of the United States on the subject of the continental shelf is extensively described in an undated position paper drafted for the Tenth Inter-American Conference, designated XIA D–8/1, not printed; a copy is contained in OAS files, lot 60 D 665.