248. Letter From the Assistant Chief of the Commodities Division, Bureau of Economic Affairs (Gabbert), to the Ambassador in Mexico (Hill)1
Dear Bob: We are making every effort to reply to the points raised in connection with your current P.L. 480 negotiations some time today. Should there be any delay, it would be because we are trying to get the best possible deal for Mexico on the amount for economic development. This might require some negotiating here with other agencies.
I talked with Ray Leddy2 yesterday and pointed out some of the problems we have faced on the Mexican corn program. He was impressed with the very favorable position that Mexico holds in relation to other P.L. 480 programs and said that he had not realized how fortunate Mexico is. We suggested that it might be helpful for you to have this information.
In dealing with various countries on P.L. 480, we must consider each program on its own merits and cannot divulge what we are doing in other countries until after agreements have been negotiated and signed. On this confidential basis, I am enclosing a list of country programs either now being negotiated or about ready to be negotiated.3 This also includes a tentative list of country programs which will soon be considered by the Interagency Staff Committee. [Page 772] You can see at a glance how tight the situation is and how well Mexico stands in relation to other programs which are vitally important to the United States. We had to turn down the Japanese program for $32.0 million last week in face of heavy pressure from the Japanese Government on the basis that we can only accommodate requests for commodities urgently needed at this time. We shall have to make further cuts in the list of probable programs to be considered in order to take care of a number of emergency situations. I might add that the Mexican request is the only one which was not substantially cut in the first place. Ray thought this situation might be made clear to the Mexicans without mentioning any specific countries or amounts, in case they raise too many problems or feel they are not getting fair treatment.
One point that is frequently misunderstood is the difference between the actual value of a program at export market price and the cost to the Commodity Credit Corporation. For example, the export market value of the Mexican program is $28.2 million and the CCC cost is $55.8 million. Briefly, the difference between these two figures is what it costs the taxpayer to finance the program. CCC cost is the actual cost to the United States and covers interest, storage costs, overhead, etc The figures shown on the attached list are all in terms of CCC costs and are the amounts which have to be charged against our $1.0 billion authorization.
I hope the foregoing will be of some use to you and that the negotiations will result in an agreement which will be mutually advantageous to the United States and to Mexico.
With best personal regards,
Sincerely yours,