239. Paper Prepared by Gordon Chase of the National Security Council Staff1
Washington, February 10, 1964.
FREE WORLD TRADE WITH CUBA—SOME
- Our objective is twofold. First, for obvious reasons, we want to cut down Free World export of critical commodities to Cuba. Second, we want to hold down or cut down the level of Free World trade with Cuba. This reduction of Free World/Cuban commercial contacts is consistent with our overall isolation policy. Also, it is probably important for other reasons that the level of Free World/Cuban trade (even in non-critical commodities) does not rise precipitously during 1964.
- Probably the most effective way of achieving this dual objective is to bring about a situation whereby the American business community would not trade with anyone trading with Cuba. Cuba has only 6 million people and, as a result, a businessman, contemplating trade with Cuba, will think long and hard before he cuts himself off from the huge American market for the sake of the small Cuban market. If a couple Latin American countries joined the U.S. effort, the action would be even more effective. It is conceivable that such action, which is based on the self-interest motive of Free World traders, would make superfluous other steps in this field.
- There appear to be three ways in which we can bring about the situation whereby the American business community would not trade with anyone in the Cuban trade. First, we could invoke the Trading with the Enemy Act to legally prohibit Americans from doing business with anyone who trades with Cuba. Second, we could make our desires known to the American business community and urge them to voluntarily cut off commercial dealings with persons trading with Cuba. Third, we could use a combination of the above two methods (e.g. We tell business leaders—“The Government is willing to take step X. Will you be willing to take step Y in order to close the circle?”).
- Probably the most effective program would depend largely on the Trading with the Enemy Act, under which we could announce that we intend to blacklist any foreign firm which trades with Cuba after a certain date. If we take this route, we may have to or want to provide loopholes (which, reportedly, is possible). For example: (a) We would undoubtedly make an exception for those firms which export food and drugs to Cuba since our own traders are allowed to do this. (b) Until the world sugar situation loosens, we may want to make an exception for those firms which import Cuban sugar (however, they would pay for it in foreign exchange). (c) We may find that a relatively few Free World firms make up a large part of the Free Worldʼs trade with Cuba and that it is not worthwhile or effective to blacklist Free World firms which trade in small quantities of noncritical items.
- Probably the biggest obstacles to the blacklisting action would be
the reaction of Free World (particularly Western European)
- Free World governments would certainly point to the violation of free trading principles (e.g. GATT and all that) and might conceivably retaliate against U.S. exporters. They would undoubtedly point out that they are forced into two-way Cuban trade involuntarily—because of the world-wide shortage of sugar.
- Our response to Free World governments could include such points as the following: First, while we also believe in the principles of free trade, there are overriding national security considerations in this case. Cuban actions in autumn, 1962 and Cubaʼs recent participation in fomenting subversion in Venezuela, Panama, and Zanzibar make it eminently clear that we are dealing with a particularly nasty, hostile power; the U.S. intends to treat Cuba as one. (It is true that there are other hostile powers which we do not attempt to isolate. Our actions are designed to fit the case and, inter alia, Cubaʼs unique geographic position makes an isolation policy an effective and appropriate response. As evidence of its impact, note how hard the Cubans and the Soviets are working to break it.) Second, we are certainly not taking our action precipitously. We have tried strenuously over the past few years to gain Free World cooperation through persuasion rather than sanction. Third, the sacrifice we are asking for, in real terms, is not great. For example, the total of Free World exports to Cuba, divided up between many countries and firms, only amounted to a little more than $100 million in each of the last two years. Generally speaking, no one, except Cuba, is going to hurt very much, even if Cuban sugar is paid for in foreign exchange.
- There may be a variety of factors which may mitigate (at least privately) a vociferous response by affected Free World governments. First, by now, they are pretty accustomed to our “extreme” behavior [Page 592] when it comes to Cuba. Second, we have been hounding Free World governments about the subject for a long time now; they will probably be only half-surprised when we finally do something decisive about it. Third, in real terms, no Free World country will suffer if it cuts itself off from Cuban trade. Fourth, Free World governments who sympathize with our objectives but who are unable to control their traders effectively, may secretly welcome action which takes the Ball out of their hands.
- Generally speaking, American business firms are unlikely to resist the proposed action. They would appear to lose little in concrete terms.
- There are some arguments in favor of taking action quickly if we are going to take it. First, we might want to take advantage of the atmosphere generated by Venezuela, Panama, Zanzibar, and Guantanamo. Second, we might want to act before the OAS discusses Rio Treaty action against Cuba because of the arms cache discovery. We would then be in a good position to ask all or some of the OARʼs to take similar measures (e.g. Venezuela). Third, there are indications that Free World/Cuban trade has hit bottom and is beginning to rise. The longer we wait, the more resistance we are likely to meet as vested interests increase along with the trade.
- Source: Johnson Library, National Security File, Country File, Cuba, Free World Trade, Vol. III, 12/63–5/65. Secret. Chase forwarded the paper to Bundy under cover of a February 10 memorandum, in which Chase wrote that Crimmins and other Cuban experts “intended to seriously explore the possibilities and problems involved in closing off the American market to Free World traders who deal with Cuba” using most likely the Trading with the Enemy Act. Chase informed Bundy that his “ruminations” were of a “preliminary nature” and he needed more facts.↩