439. Letter from Udall to Ball, May 11
I am glad to have your letter of April 13 which should serve to initiate necessary conversations to enable us to reach a concerted point of view with reference to the pending lead-zinc bills.
We are aware of the importance of international trade in lead and zinc, and we have, as you know, participated fully in the work of the International Lead-Zinc Study Group. We have been keenly disappointed at the unwillingness of the Study Group to recognize the problems which our domestic lead and zinc industries face. Not until this last meeting in Mexico City was there any real effort to cope with the fundamental problem of excess world supply of lead. Even these efforts were conditioned in part on the announced willingness of the United States to acquire through barter surplus lead stocks outside of the United States. The Group has made no effort to deal with the problems of zinc since early 1959.
We do not wish to underestimate the value of the Lead-Zinc Study Group, and we expect to continue to work with this body. We cannot agree, however, to the proposition advanced in your letter to the effect that considered unilateral action would jeopardize these efforts. We believe many foreign participants in the Group will admit that the imposition by the United States of quotas on imports in late 1958 had a salutary effect upon producers and governments, and that such unilateral action has been, to a large degree, responsible for the limited success of the international effort to date. Nor do we believe we can continue to defer additional action by the United States while awaiting more effective action of the Study Group.
Our domestic lead and zinc industries, as you point out, are gradually losing their economic strength. Hundreds of small, independent mines have closed. Independent smelters are finding it difficult to keep going. One of our largest integrated companies has shown heavy losses for two consecutive years. We have reason to believe that exploration and development, plant modernization, and other capital expenditures are lagging because of the uncertainty of the outlook.
[Facsimile Page 2] [Typeset Page 1743]In contrast, the industries of Europe, Australia, Japan, Canada, and even Latin America are proceeding with development. Peru, whose reaction to imposition of the quotas was described in the dispatch attached to your letter, has increased its mine production of lead from 124,000 metric tons in 1957 to 131,000 in 1960. Peruvian smelter production of lead has increased from 69,000 metric tons to 73,000 over the same period. For zinc, Peruvian mine output has increased from 158,000 metric tons in 1957 to 169,000 in 1960 while smelter production fell off slightly.
Since 1957, production of refined lead in the United States has fallen 205,000 tons as contrasted to an increase in the balance of the free world of 115,000 tons. For zinc, U.S. smelter output declined 173,000 tons between 1957 and 1960, while production in the rest of the free world increased 154,000 tons.
It is quite apparent that despite the imposition of quotas, the industry outside of the United States is in comparatively satisfactory condition when measured against the situation in the United States. We are deeply concerned that if foreign producers continue to take advantage of the relatively easy access to the U.S. markets we shall lose much of our remaining productive capacity for these two important commodities.
The Area Redevelopment Program will do little, if anything, for that segment of the lead-zinc industries still operating. It will in time provide assistance to stranded mining communities, but even this limited contribution is probably quite a few months away.
We cannot accept the premise that any action to relieve the domestic industry would meet insuperable objections from the standpoint of foreign policy. The Department is firmly of the view that a program must be developed to prevent further deterioration of the domestic lead and zinc industry and to enable the industry to regain some of the ground lost in the past four years.
We should be pleased to discuss this matter with you in detail.
Sincerely yours,
- Domestic lead-zinc industry relief and foreign policy considerations. No classification marking. 2 pp. Department of State, Central Files, 411.004/5–161.↩