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

411.9631/11–1754: Telegram

No. 377
The Secretary of State to the Embassy in the Philippines

top secret

Washington, November 17, 1954—6:19 p.m.

1787. Limit distribution. As mentioned Deptel 1735¹ work on tariff preferences, most important question remaining without substantial measure of agreement, being carried on chiefly through Puyat and Cuaderno who apparently not keeping Mission fully informed. Appears from your telegram 1334² Laurel also keeping Magsaysay informed only along general and vague lines. Possibly Laurel following this policy partly because he interested personally only in general principles rather than details agreement; partly because he wishes report more fully only when full agreement is reached on tariff preferences; and partly he may wish avoid any possibility leaks to press on details negotiation.

Further progress has been made since Deptel 1735 on tariff preference question. This still delicate question since basic difficulty continues to be that Philippines wish derive substantial revenues and protection in near future from imposition tariffs on U.S. goods entering Philippines while retaining U.S. market through imposition in near future only nominal percentage of U.S. tariff on Philippine goods. U.S. Delegation naturally desires an agreement that Congress and U.S. businessmen will accept and cannot agree to too great inequalities in tariff treatment.³

Delegation continuing to impress upon Filipinos that although sympathetic their aims of revenue and reasonable protection they cannot achieve those aims entirely expense of U.S. interest. This position being brought home step by step to Filipinos and once agreement can be reached on degree of difference in tariff treatment other questions can apparently be concluded without undue delay.

Above for your information only and for background in discussions with Magsaysay as two delegations have agreed not give out information on status negotiations except jointly. We understand Magsaysay desire for more complete information but do not believe would be appropriate such information come from U.S. sources rather than from his own Delegation.

No encouragement should be given Magsaysay to believe he will receive invitation visit U.S.

Dulles

1. Dated Nov. 12, not printed. (411.9631/11–854)
2. Dated Nov. 10, not printed. (294.9641/11–1054)

3. The most recent formula proposed by the U.S. Delegation on tariff preferences, which it was thought possible might be acceptable to the Philippines, was described in the following language in a memorandum of Nov. 17 by Baldwin to Carl D. Corse, Chief of the Commercial Policy Staff, Department of State:

   “Briefly, it would commence with the imposition by the U.S. of import duties on Philippine products which would commence at 5 per cent for the first three years, then increase to 10 per cent for three years, then to 20 per cent for three years, then 40 per cent for three years, then 60 per cent for three years, then 80 per cent for the next three years to the last jump to 100 per cent.

   “U.S. goods entering the Philippines would start with a 20 per cent tariff which would be increased each three years until 100 per cent had been reached at a rate which would give the Philippines an advantage over the U.S. at each step in the process.” (FE files, lot 58 D 209, box 19825)