193. Telegram From the Department of State to the Embassy in Pakistan1

1656. Arguments advanced Embtel 13842 seriously considered. However following reasons support world-wide procurement policy:

U.S. foreign economic policy as stated President January 103 is support of “foreign economic program that will stimulate economic growth in the free world through enlarging opportunities for fuller operation of forces of free enterprise and competitive markets.” World-wide procurement policy integral part of programs adopted to serve self-interest U.S. well as country receiving aid by making sure U.S. aid funds used procure largest amounts suitable goods possible. Benefits to third countries are by-product and not primary purpose policy.
Aid program Pakistan provides dollars that can be used purchase U.S. equipment that can compete on price and quality basis with that produced elsewhere. In 1954 U.S. exported 12.76 billion dollars goods outside aid programs. World-wide procurement policy no way changed responsibility U.S. missions to aid U.S. businessmen in bringing advantages their products attention potential buyers but we believe continuing export surplus is proof U.S. products can and do compete and do not need special subsidies. Also Federal Government currently financing specific programs such as for participation Trade Fairs and market development programs financed through P.L. 480. Limitation aid programs to U.S. commodities apt create resistance rather than open reliable markets for U.S. goods.
No tied loan or grant program required to make sure dollars in aid program will eventually be used buy U.S. goods.
World-wide procurement policy has had salutary political well as economic effects. Particularly appreciated by countries with long history colonial or dependent status. Abandoning program at crucial moment our relations with underdeveloped areas most inadvisable politically. Soviet propaganda distorting surplus agriculture disposal program claiming we only desire dump our products on rest world. World-wide procurement policy has been evidence our good faith providing aid program designed get most for aid dollars and in U.S. commercial policy promote multilateral competitive international trade.

Concur desire foster U.S. private investment and markets Pakistan but do not believe suggestion in line long-range interest broadening total foreign market for U.S. goods nor consistent President’s January 10 policy. Further it could not be applied in individual country as Pakistan without serious adverse effects our relations other countries. FYI Dodge Council now studying U.S. procurement policy. Results when available will be transmitted.

  1. Source: Department of State, Central Files, 790D.5–MSP/4–1555. Confidential. Drafted by Martha M. Black, of TAD; cleared with E, NEA, S/MSA, and FOA; and approved by Herman H. Barger, Chief of the Commercial Programs Branch, TAD.
  2. Supra.
  3. The President’s report on the activities carried on under P.L. 480 is printed in House Document 62 (84th Cong., 1st sess.).