Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

103. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Secretary of State¹

Washington, May 7, 1957.

SUBJECT

• Proposal to Establish Flexible Import Taxes on Lead, Zinc, and Fluorspar

Background:

At the request of the White House, Assistant Secretary of Interior Seaton met with Secretary Humphrey, Secretary Weeks, Under Secretary Dillon, and others, on Monday to try to reach agreement on a long range minerals policy which the Administration can support. Proposals scheduled for Cabinet discussion on Friday include a flexible import tax on lead, zinc and fluorspar.

A proposal for an increase in taxes on lead and zinc was turned down by the Administration in 1954 and a stockpile program instituted instead because of the serious foreign policy implications of an increase in duties. The effect of such action on our relations with Latin America would be even more damaging today than in 1954 for the following reasons:

1. An important Inter-American Economic Conference is scheduled for Buenos Aires in August. The U.S. will be pressed to offer economic development assistance to this area comparable to that given in other areas of the world. Imposition of taxes on products of such importance in our trade with Latin America would undermine our argument that grant aid is not required because of the ready access which these countries have to the U.S. market.

2. The proposal runs directly counter to the broad policies of the Administration regarding reduction of duties, fostering of competition, and expansion of international trade which will also be under discussion at Buenos Aires. We have urged these policies upon the Latin American countries with some success. A departure from them will endanger our position of leadership in the commercial policy field and our ability to protect the interests of U.S. exporters in the rapidly growing Latin American market.

3. Our cotton export policy has been widely criticized in Latin America and has already resulted in strain on our relations with Mexico and Peru. An increase in the duties on lead and zinc would be a serious blow to the economies of the same two countries. U.S. imports of lead and zinc from Mexico in 1956 were valued at $48.6 million. Imports from Peru amounted to $41.4 million. Fluorspar is also important to Mexico and provided dollar exchange of almost $6 million in 1956. Cotton and minerals are the two most important exports of both countries and imposition of new duties on metals, in combination with lower prices for cotton over the past year, will undoubtedly have serious repercussions on our relations with both countries.

I understand that a briefing has been prepared in E regarding the objections to the proposal from an economic standpoint. In this instance the objections from the political standpoint are, I believe, of equal or greater importance.

Recommendation:²

That you oppose the restrictive import features of the Department of Interior’s recommendations as inconsistent with our foreign economic policy, and offer the Department’s assistance in any review of the program.

If this item has been removed from the Cabinet agenda for Friday, as a result of the Monday meeting, that you take the matter up directly with the President.

1. Source: Department of State, Rubottom Files: Lot 59 D 573, Economic. Confidential. Drafted by Mulliken. A covering note from Rubottom to Kalijarvi, May 8, 1957, reads as follows: “We in ARA will be glad to mark this for clearances by you and any other offices of the Department, or we can send separate memoranda to the Secretary. But in the interest of speed I am forwarding [it] to you as is.”
2. There is no indication on the source text of action by the Secretary on this recommendation.