128. Telegram 49 From the Embassy in Costa Rica to the Department of State1
49. Subject: 1975 Meat Import Program. Refs: (A) State 28297 (B) State 626 (C) San Jose 4919.
Begin Summary: Initial reactions indicate that Costa Rican officials are shocked by magnitude of proposed reduction of meat exports and contemplated U.S. voluntary restraint program. Costa Rica would suffer 20 percent loss as compared to 1974 shipments and 30 percent loss as compared to 1975 potential. Embassy anticipates that the GOCR will make a strong appeal for a more equitable share of U.S. meat imports under the voluntary restraint program. End Summary.
1. Embassy has not yet received reply to its note of January 2 informing GOCR of proposed voluntary restraints (VRS) on meat exports, but AgAtt was called in yesterday for preliminary discussion with Minister of Agriculture Garron, and two key advisors to Ministry of Economy came to Embassy at their request to seek further information on program from Chargé and AgAtt. Embassy has also been approached by Cattlemen’s Federation and Meat Packers Association. Minister of Agriculture and other concerned GOCR officials met yesterday with cattle growers and meat packers and today Foreign Minister Facio, who wishes to take the lead in consultations with the U.S., is meeting with Ministers of Agriculture and Economy and key advisors, after which instructions are to be sent to Costa Rican Ambassador Silva.
2. General impression of level of proposed VRS for Costa Rica is surprise and astonishment. Proposed VRS of 43.2 million pounds represents approximate 20 percent reduction from expected 1974 exports to U.S. and would be nearly one-third under calculated 1975 export po[Page 384]tential. A reduction of beef exports of this magnitude will be a severe shock to local cattle industry and will also affect general level of exports and economy according to local officials (Embassy estimates beef export reduction at $7 million). They add, that to offset shortfall, relative to export potential, domestic consumption would have to increase 10 lbs per person, too much to be absorbed on local market which only consumes about 25 lbs per capita annually.
3. Minister of Agriculture Garron is particularly disturbed by proposed level. He told AgAtt that country had been answering call for increased meat exports even at sacrifice of local grain production. He said that World Bank and other international lending institutions have helped to stimulate local livestock industry and if exports held to proposed levels, there will be serious repayments problem.
4. Costa Rica is also disappointed that U.S. VRS do not recognize its performance as a faithful supplier. Costa Rica had hoped that its 1974 showing of being one of few countries to increase its exports during period of declining prices would be recognized by U.S. Gain of 1.1 percent for region over 1972 not accepted by some as much recognition for region and its efforts to increase export to U.S. Costa Rican officials proud that their beef exports have shown steady growth and no large year-to-year fluctuations as is case with other countries. They also felt that this would be recognized by U.S.
5. Action requested: Several questions have already been asked of Embassy and others are anticipated. Department’s guidance in responding to following would be appreciated: (a) What is open to consultations relating “to implementation and administration of 1975 program” (ref A, para 5)? Is the base period open to negotiations; a CY 1972–74 base would probably be more beneficial to Costa Rica and possibly also to Central America vis-à-vis Australia and New Zealand. What about 1973–75 base period as implied in law? What about estimated level of imports, could this be raised from current 1,150 million pounds to “trigger level” minus one or 1,180 million pounds? (b) Ministry of Agriculture official asked, what is avenue or mechanism for attempting to negotiate a larger VRS level? (c) Another official questioned consequences for Costa Rica if it opted not rpt not to participate in the VRS program like Canada, U.K., and Belize? We assume that if country with Costa Rica’s magnitude of exports opted not to participate, absolute quota of 1,074 million pounds would be imposed, is this correct and how would shares be allocated? (d) How is remaining 79.1 percent divided and how does this compare with 1972 shares?
6. Embassy would appreciate additional information on negotiation procedures and game plan. Assume next step is to await GOCR response and indications of their willingness to sign VRS. How do we move if they request larger figure and hesitate to give assurances about [Page 385] signing a VRS at this time? Also, what is relationship between our direct dealings with GOCR and continuing SCCN meeting? Are we correct in assuming that our bilateral discussion and SCCN negotiations are parallel?
7. Answers and guidance to above points urgently needed. Minister of Agriculture to meet Jan. 6 with cattlemen and packers, and Ministers of Foreign Relations, Economy and Agriculture to meet on January 7 to work out overall policy.
8. Comment: Officials who have raised subject with Embassy thus far seem to have had expectations that 1975 program would have incorporated volume for Costa Rica somewhat closer to recent annual export volumes and not such a large reduction. They admit that no numbers were discussed at December 19 SCCN meeting, but possibly U.S. willingness to hold discussions at least lent some feeling of confidence to them. Guidance statements included in ref B and in particular statements that “1975 import level . . . about 85 million lbs (eight percent) higher that estimated 1974 imports” and “the voluntary restraints we propose are close to our estimates of what Western Hemisphere suppliers might ship to U.S. during 1975” are likely to lead Costa Ricans to believe that they are being treated unfairly, vis-à-vis other suppliers, in being asked to absorb such a large reduction in exports as compared to 1974 shipments and 1975 potential.
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Summary: The Embassy reported that Costa Rican officials were shocked by news the United States was imposing limits on meat imports and that Costa Rican producers would be asked to reduce their shipments to the U.S. market under the terms of a proposed voluntary restraint agreement.
Source: National Archives, RG 59, Central Foreign Policy File, D750006–0690. Limited Official Use; Priority. Telegram 28297 to multiple recipients is dated February 7. (Ibid., D750045–0927) Telegram 626 to San José is dated January 7. (Ibid., D75006–0690) Telegram 4919 from San José is dated December 31, 1974. (Ibid., D750001–0317) In telegram 282971, December 28, 1974, the Department reported that limits on meat imports would have to be imposed in 1975 under the terms of a 1964 law and asked addressee posts to conclude voluntary restraint agreements establishing quotas, with Costa Rica’s quota to be set at 43.2 million pounds. (Ibid., D740376–0575) In telegram 392 from San José, January 29, the Embassy reported that Costa Rican officials had made a strong case for more favorable treatment under the U.S. meat import program and noted that a Costa Rican delegation planned to travel to Washington to discuss the issue with U.S. authorities. (Ibid., D750033–0487)
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