Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

372. Telegram From the Department State to the Embassy in the Philippines¹

Washington, November 29, 1955—5:02 p.m.

1929. Appreciate your 1567.² It appears that President Magsaysay does not understand extremely grave consequences if Philippines fail honor commitment to admit tobacco. It imperative Magsaysay his Cabinet and principal advisers fully appreciate probable repercussions if tobacco not admitted. You will recall that there was introduced in last session Congress amendment to proposed sugar bill which would provide for suspension of sugar quota of any country that discriminated against importation American agricultural products.³ The adoption of legislation this nature would obviously constitute a major threat to Philippine’s principal source of foreign exchange, if they failed avoid action construed as discriminatory in U.S. We have been informed Philippine Cabinet will consider tobacco question November 30.

In addition to view expressed our 1915⁴ President and other Philippine leaders should have full understanding relationship tobacco question and sugar. In our view decision not to admit this nine million pounds tobacco particularly in view reluctance to accept PL 480⁵ tobacco might have such extreme consequences to Philippine-US relations and Philippine economy that we believe a further conversation with President Magsaysay to make sure he understands all implications is necessary.

In conveying substance this telegram to Magsaysay impress urgency we view this matter.

Dulles

1. Source: Department of State, Central Files, 411.9641/11–2955. Confidential; Niact. Drafted by Jones and Bell, cleared in substance in E, and approved by Robertson.
2. Not found in Department of State files, but telegram 1570 from Manila, November 30, commented on telegram 1567. Ferguson reported that he had informed President Magsaysay on November 29 in the “strongest of terms” that “extremely grave consequences” would result if the Philippines refused to admit nine million pounds of American tobacco into that country which it had previously agreed to purchase. (Ibid., 411.9641/11–3055) Additional documentation on this subject, as well as many related matters affecting commercial relations between the United States and the Philippines, is Ibid., 411.9641.
3. Reference is to proposed amendments to the Sugar Act of 1948. (61 Stat. 338; approved August 8, 1947)
4. In telegram 1915, October 19, the Departments of State and Agriculture explained that the nine million pounds of American tobacco had been shipped to the Philippines on November 28 on the assumption, which had been confirmed by the Embassy, that the Philippines would admit the shipment before January 1, 1956. Repudiation by the Philippines of an agreement which had previously been reached would leave the United States with no alternative except to return the tobacco to the United States incurring substantial financial loss. (Department of State, Central Files, 411.9641/10–1955)
5. Since June, the United States had been attempting unsuccessfully to conclude a trade agreement with the Philippines under Public Law 480. P.L. 480 (68 Stat. 480), passed on July 10, 1954, was designed to help dispose of U.S. agricultural surpluses by increasing the consumption of U.S. agricultural commodities abroad. The United States sought to conclude a $19.5 million sale of American tobacco to the Philippines under this law, but Philippine officials, anxious to protect their native tobacco industry, were reluctant to accept American terms.