Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

411.9631/3–1954: Telegram

No. 353
The Ambassador in the Philippines (Spruance) to the Department of State

secret

Manila, March 19, 1954—5 p.m.

2068. Joint Embassy–USOM message. Reference Deptel 2350 March 16.¹

• Part I:

  In general, we do not believe US Government should take initiative discuss broad range economic subjects with Philippine Government either during forthcoming discussions trade agreement or by separate but parallel action. It is highly probable that if broad discussions economic aid program were held concurrently with discussions trade agreement there would be widespread belief here that US trying buy trade concessions. One of major sources of irritation re present trade agreement is tie-in with passage Philippine rehabilitation act. In any case, we see no useful purpose broad discussion economic aid program at this time. Other matters which are more germane to discussion trade agreement will undoubtedly arise spontaneously during that discussion. We believe it desirable that Filipinos raise such matters on own initiative so as avoid implication US obliged extend trade or other concessions in return for negotiating FCN treaty or other agreements.

• Part II:

  US should be prepared discuss factors affecting possibility reducing exchange controls, restoring currency convertibility and eliminating exchange tax. However, Filipinos will probably raise possibility their taking such steps if trade agreement were to be revised in accordance their proposals. If Filipinos do not initiate such discussions, it might become desirable that we do so. We should seek obtain objectives in question if we decide extend trade concessions that make them possible.

  2. Investment problems and possibility FCN treaty will undoubtedly be discussed in connection Philippine proposal for reciprocity parity provisions. Prospects obtaining FCN treaty appear greatest if Filipinos believe such treaty would primarily be of benefit to them by encouraging foreign investment in Philippines. Our bargaining position would be impaired to extent we press for such treaty.

  3. For reasons mentioned Part I above, we do not believe desirable discuss technical and economic aid program concurrently with discussion trade agreement.

• Part III:

  We do not believe Filipinos regard Bell report, Foster–Quirino agreement and June 16, 1951 note² as obligation US make loans through Export-Import Bank rather than IBRD. Insofar as Filipinos believe US committed extend economic aid, they believe such aid should be in form grants rather than loans. To extent Filipinos given no choice but accept aid in form loans rather than grants, Filipinos would probably not be much concerned whether loans from Export-Import or IBRD. Many Filipinos would probably prefer IBRD loans as evidenced by fact Filipinos first sought Ambuklao loan from IBRD and turned to Export-Import only after IBRD rejected such loan. It is possible Philippines will some day contend IBRD loans should not be considered as meeting “commitments” Foster–Quirino agreement.

Spruance

1. In telegram 2350, the Department of State indicated that it was considering the possibility of taking up with the Philippine Government a broad range of economic subjects, the purpose in part being to strengthen President Magsaysay. It then posed a number of questions on which the Embassy commented in the numbered parts of telegram 2068. (411.9631/3–1654)
2. The note is printed in Department of State Bulletin, July 16, 1951, p. 96.