69. Memorandum of Conversation0
SUBJECT
- Call of the Polish Ambassador Regarding US-Polish Economic Relations
PARTICIPANTS
- The Polish Ambassador, Edward Drozniak
- Dr. Marian Dobrosielski, Counselor, Polish Embassy
- The Under Secretary
- Mr. Julius L. Katz, EE
The Ambassador expressed satisfaction that after so many months of delay the PL 480 negotiations had finally begun. He wished to raise some general problems connected with our bilateral relations, rather than the negotiations per se, but he hoped his point of view would be taken into account before the negotiations were finalized. The past months, he said, were full of expectation, promises and disappointments. (He noted parenthetically that “some officials” of the State Department said they had a right to be disappointed.) He realized, of course, that US-Polish relations were affected by the international situation, and that the Administration was not always able to do what it wished. Nevertheless, facts were facts and the Polish Government could not depend upon intentions and attitudes. The Ambassador said that he wished to call attention to these facts:
- 1.
- Despite a promise last December that there would be a further agreement in the early Spring, and a further promise to begin negotiations in June, nothing had happened until now. The promises of last December and June had figured in Polish planning for animal husbandry. When the U.S. did not provide grain Poland had to buy grain at great cost in order to maintain the hog population. The result was a grave deterioration in the Polish balance of payments.
- 2.
- Despite the Administration’s attitude, the Congress had voted to withdraw MFN from Poland. This, together with the boycott campaign against goods of Polish origin, was producing a serious effect on Polish exports to the U.S.
- 3.
- Poland had expected to see a further development in bilateral relations with the U.S., i.e., it expected a change in the Battle Act. Today one hears nothing about this. The Ambassador noted in this connection that he came here 18 months ago to work for improved relations; now he has to work hard to maintain the status quo.
- 4.
- To the problems with the U.S. must be added problems with Western Europe, particularly the Common Market. Some 40% of Poland’s trade was with the West, but because of trade difficulties and discrimination, Gomulka had recently pointed out that Poland’s dependence on trade with the West would have to be reconsidered. In the past five years, Poland had lost $450 million through a working of the terms of trade. This produced a terrible strain on Poland’s balance of payments.
- 5.
- Poland’s agricultural situation this year was very bad. Grain production was 2 million tons less than last year, potatoes were lower by 7.5 million tons, and the vegetable and fruit crops were very bad. Poland had to import between 2.7 and 2.9 million tons of grain this year.
- 6.
- In these circumstances, Poland expected to receive a proposal from the U.S. which would recognize Poland’s present situation and reflect the traditional generosity of the U.S. The U.S. offer, however, was only $37 million. Without wishing to enter into details, the Ambassador wished to point out that Poland had requested 1.5 million tons of grain. The U.S. offered 400,000 tons of wheat. Yugoslavia, he noted, had recently received 1.2 million tons of wheat. Similarly with respect to cotton, Poland had requested 40,000 tons to cover its deficit. The U.S. offered 4,000 tons.
Summing up, the Ambassador said that in one of Poland’s most difficult years the U.S. made its smallest proposal and had proposed conditions (cash purchase commitments) which were beyond Poland’s capacity at the present time. On the assumption that the U.S. shared Poland’s desire to advance our relations, he requested:
- 1)
- A public statement by the U.S. Government indicating the intention to maintain the status quo regarding most-favored-nation treatment. This would assure American firms who were uncertain about the future of trade with Poland.
- 2)
- A public statement, preferably by the President, opposing the boycott campaign. The efforts of the Department in the form of letters and interviews were appreciated but this was not enough.
- 3)
- Efforts in the new Congress to amend the Battle Act.
- 4)
- Review by the Under Secretary of the U.S. position in the PL 480 negotiations. The Ambassador hoped that the U.S. could examine the situation not merely from a statistical point of view but from the viewpoint of the Ambassador’s presentation.
The Under Secretary thanked the Ambassador for his clear and frank presentation and assured him that we wished to have good relations with Poland. There were, however, forces beyond control which limited the full possibilities. With regard to the points made by the Ambassador, Mr. Ball commented:
- 1)
- The President had indicated in a speech in Buffalo his intention to seek a change in the MFN provision of the Trade Expansion Act.1 Mr. Ball noted that he personally had done everything in his power to prevent the passage of this provision.
- 2)
- With regard to the boycott campaign, it was difficult to control the attitudes of individuals. He was not sure that an official statement would provide the answer to this problem, but said he would consider this matter further.
- 3)
- Regarding the PL 480 negotiations, Mr. Ball recalled the difficult period in the Congress on the Foreign Assistance Act which made it uncertain whether PL 480 could continue. In the circumstances we could not move faster. He indicated that he was aware of the general considerations in the negotiation but was not familiar with the details. He stated that he would review our position with Mr. Katz in the light of the Ambassador’s remarks.
- 4)
- With regard to the Battle Act problem Mr. Ball noted that we tried to get an amendment, had succeeded in the Senate, but not in the House. It was pointed out that the worsening of the international situation, notably in Berlin and Cuba, was largely responsible for the failure to obtain passage of the amendment.
Invited by Mr. Ball to add any further comments, Mr. Katz observed that the Ambassador’s first fact was based upon a misapprehension, i.e., that we had “promised” that there would be a further agreement for grain in the early Spring. In fact we had agreed to consider further sales of wheat. We had considered this and concluded that we were not in a position to offer additional wheat and so informed the Ambassador at the time we signed a supplemental agreement for cotton and rice. The current negotiations were a new round, unrelated to last year’s negotiations.
Mr. Ball concluded the conversation reiterating that he would review our position in the negotiations.