278. Letter From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Chairman of the House Agriculture Committee (Cooley)1

Dear Mr. Cooley: During the conversations on sugar legislation in your office which I attended on July 8 and July 15,2 two [Page 823]questions of particular concern to this Department were discussed, namely, (1) the division of their share of the United States market among Cuba and the full duty countries, and (2) the nature of the provision in any new sugar legislation which is required by virtue of the fact that some of the full duty countries, particularly Peru, are not members of the International Sugar Agreement.

I believe that it is accurate to say that the various considerations regarding the relative shares of Cuba and the full duty countries which we discussed in your office were very much the same as those which the Executive branch, particularly the State Department, has had under consideration for the past several months and that they were carefully weighed before the Department addressed its report on H.R. 5406 to you on June 22. My testimony before the House Agriculture Committee on the same date also reflected the recommendations of the Department on this matter. In the belief that your Committee might wish, before it takes action, to have a fuller explanation of the Administration’s recommendation on this question, I am enclosing a memorandum entitled “Rationale of Administration’s Recommendations Regarding Distribution of Sugar Quotas Among Foreign Suppliers”.3 This is done with no desire to delay or interfere with action by your Committee and in full recognition of the fact that the Committee may accept, reject, or modify the Administration’s recommendations on this or other matters.

As you will remember, the Department has made no recommendation regarding your suggestion that the new sugar legislation contain a provision to the effect that those full duty countries which by January 1, 1957 are not members of the International Sugar Agreement4 should not benefit by any increased quotas under the Sugar Act and that the increased quotas to which they might otherwise be entitled should be distributed among the other full duty countries. The Department recognizes that such a provision might facilitate the operation of the Sugar Act by affording greater assurance as to the exact size of the quotas of the full duty countries. It is the Department’s view, however, after careful consideration, [Page 824]that the disadvantages of the provision would outweigh its advantages.

Peru and several other full duty countries with smaller quotas in the United States market are not members of the Sugar Agreement. In the case of the smaller sugar producing countries their non-participation in the International Sugar Agreement has probably been the result of the fact that they export such small quantities of sugar to the world market as to make their participation in the Agreement of questionable value to them. In the case of Peru, non-participation was apparently the result of Peru’s dissatisfaction with the quota which Peru was offered at the conference at which the Agreement was negotiated.

The difference between the quota which Peru was offered under the Agreement and the one she requested was only 50,000 tons and it is believed that this might have been narrowed through further negotiation. The failure of the Peruvian Government to obtain what it considered an equitable quota has, nevertheless, been a somewhat disturbing factor in Peruvian relations with countries which agreed to participate, including the United States. Implementation of Article 7 of the Agreement, which limits imports of sugar by participating importing countries from non-participating exporting countries to the absolute amount of sugar imported from such countries during a base period, may be something of a problem in United States relations with Peru. In accordance with the provisions of this Article, the United States will be unable to increase its imports of sugar from Peru, as it would if recognition did not have to be given in H.R. 7030 to our obligations under the Sugar Agreement. During the recommended duration of H.R. 7030, Peru’s quota in the United States market would otherwise increase by enough to take care of Peru’s present excess exportable production, even if Peru were to accept the quota it was previously offered under the International Sugar Agreement. It is likely, therefore, that Peru will find it advantageous, if H.R. 7030 is approved, to accede to the Agreement. It is believed that it would not be desirable, however, to provide that she must accede by any particular time. Even now Peru is in the position of having to negotiate for accession to, and a quota under, the Agreement with countries which might benefit by her non-accession, especially since Peru’s failure to accede would mean that they would receive larger quotas in the United States market. To require that she must accede by any particular time might very well [Page 825]place her at an increased disadvantage, making her negotiation for accession even more difficult.

Sincerely yours,

Henry F. Holland5
  1. Source: Department of State, Central Files, 811.235/7–1855. Drafted by Cale. Cleared in the Department of Agriculture.
  2. In these two meetings, Cooley met with representatives of the House Agriculture Committee and the Departments of State and Agriculture in order to discuss the possibility of obtaining agreement on sugar legislation before the current session of Congress ended. In the July 8 memorandum of conversation, Cale reported that Congressmen William R. Poage (D.–Tex.) and Cooley had been impressed with the need for honoring the moral commitment to Cuba not to reduce its participation below the level which it would have reached during 1956 under the present act. But they questioned the desirability of permitting Cuba to continue to increase its participation beyond that level. Holland replied he thought it desirable to permit the full-duty countries, the domestic areas, and Cuba all to grow. (Ibid., 811.235/7–855)

    In Cale’s memorandum of conversation of July 15 describing the meeting that day, he wrote that Holland stressed that any cut in the Cuban share beyond that recommended by the administration might adversely affect U.S. relations with Cuba. Holland added that any division of the foreign share that was very unfavorable to Cuba might result in the fall of the Cuban Government which had been cooperating very closely with the United States. (Ibid., 811.235/7–1555)

  3. Not printed.
  4. Reference is to the agreement concluded at London, October 1, 1953, and entered into force May 5, 1954; for text, see 6 UST 203.
  5. Printed from a copy which bears this typed signature.