145. Memorandum of Conversation1

SUBJECT

  • Secretary’s Meeting with Costa Rican Foreign Minister Facio

PARTICIPANTS

  • The Secretary
  • Mr. Katz
  • Mr. Rogers
  • Mr. Bova (Notetaker)
  • Foreign Minister Facio
  • Ambassador Silva

[Omitted here is discussion of Facio’s trip from London, the upcoming Santiago meeting of the OAS General Assembly, and Kissinger’s February visit to Costa Rica.]

The Secretary: What problems do we have? Meat exports, no?

Foreign Minister Facio: Yes, the meat quota. I know that Bill and Mr. Katz have been working very hard on this. But I certainly have a problem at home. I understand how Australia, especially, has reacted. Some people in Costa Rica, however, still don’t understand the geopolitical considerations. I know that Australia has about 70% of the U.S. meat import market. Our part is very little. Costa Rican exports amount to about .003% of U.S. meat consumption.

The Secretary: How much is involved?

[Page 427]

Mr. Katz: The problem isn’t numbers, as such. We are under a legislative ceiling and under current circumstances the President cannot waive that ceiling.

The Secretary: What circumstances? The election?

Mr. Katz: Yes, but not just that. Last year the President did not waive the quota either. We have the consumers on one side and the cattlemen on the other. The cattle industry has been depressed for the last few years. We can’t go over the trigger point. We are also having a problem working out an agreement which is acceptable to twelve different countries. We have to be aware of maintaining historical relationships. We broke the pattern last year to assist Costa Rica and other countries by changing the allocation formula. If we were to have to impose quotas, this means a reduction of 10% for all exporting countries. It would hurt Costa Rica even more than the current situation. We have very little flexibility. With regard to changing the reallocation formula, our problem with Australia stems from the reallocation provision in the Sugar Act which gives priority to the Latin producers. Australia refused to accept a similar provision for meat exports.

The Secretary: What do you mean by refusal?

Mr. Katz: They said they would not sign an agreement if that provision was in it.

The Secretary: They said go ahead, we dare you to cut us by 10%?

Mr. Katz: We made a strenuous effort to negotiate a major reallocation formula, but the Australians would not accept it.

The Secretary: How much is Costa Rica asking for?

Mr. Katz and Foreign Minister Facio: Ten million pounds.

The Secretary: How much does Australia export?

Mr. Katz: Over five hundred million pounds.

The Secretary: Would the ten million we give to Costa Rica come out of Australia’s hide?

Foreign Minister Facio: Not necessarily.

Ambassador Silva: It could come from the cushion.

Mr. Katz: It would come out of everybody’s hide. The cushion is needed. We went over the level allocated last year. It is very difficult to manage this program. Last year Australia gave up some of its share to Costa Rica.

Foreign Minister Facio: Australia has other markets for its meat. It exports to the socialist countries and to Japan. We are excluded by the Lome Convention from exporting to Europe.

Mr. Katz: We have spoken to the Europeans about your exporting there.

[Page 428]

Foreign Minister Facio: Yes, but there is a very high tariff. It is difficult to compete there.

The Secretary: When do we have to have an answer?

Mr. Katz: Last December. We are late now. Three countries have signed the agreements and we have an agreement in principle with all the other countries.

Foreign Minister Facio: The other countries don’t have our problem, the production. We have been encouraged to diversify by foreign loans. We made a small deal with Israel for meat exports, but this is for a minimal supply. We tried to make a deal with Jamaica but when Australia found out about it, the Australians offered subsidized meat to the Jamaicans. The Australians are our persecutors.

Mr. Katz: The Australians were exporting into Costa Rica.

Foreign Minister Facio: We heard about this attempt to export some pre-cooked meat, but we won’t permit that. We will ban the importation of any meat for reexport. In the case of pre-cooked meat, we could do that with our own processes.

Mr. Katz: About the idea of exporting processed meat as an alternative? Have you explored this?

Foreign Minister Facio: Yes, We have. There are great cost disadvantages, and if we were to go to all the expense, we would still not be all that certain that you would not charge that meat to our quota.

The Secretary: Would we do that?

Mr. Katz: No, it would come in under a different tariff category. Obviously, if they were to export hundreds of millions of pounds in this way there would be a problem.

Ambassador Silva: I understand there is a tariff category for meat worth less than 30 cents a pound, but this would not seem feasible.

The Secretary: Is that the limit, 30 cents a pound?

Mr. Katz: No, there are several different categories. The restraint program includes fresh or frozen meat. If the meat is cooked and prepared it is not subject to quota.

Foreign Minister Facio: We may explore that possibility. It will still be very difficult to explain to the Costa Rican people that we are back to the same restraint level as last year. We expected we would be able to increase our level, at least through the reallocation of Central American shortfalls.

The Secretary: How about that?

Mr. Katz: That is what we couldn’t negotiate with the Australians. It is academic anyway as we do not believe there will be any shortfalls this year.

The Secretary: Then why didn’t Australia agree?

[Page 429]

Mr. Katz: It felt that this would discriminate against them. They are unhappy with a similar provision in the Sugar Act.

The Secretary: What if we just said we are going to do it?

Mr. Katz: Then Australia won’t sign the restraint agreement; and this will trigger quotas.

The Secretary: (smiling) That is a horrible thing to say.

Foreign Minister Facio: If we didn’t sign, that might trigger quotas. How would Australia react to that?

Mr. Katz: If Costa Rica doesn’t sign, quotas probably would be triggered.

The Secretary: The Australians are playing chicken with us. What if we just told them this is what we are going to do?

Mr. Katz: We can’t force them to sign the agreement. We may just have to go to quotas. This would hurt Costa Rica.

The Secretary: Supposing Australia refuses to sign the agreement. Does that mean that we would have to impose a quota on Costa Rica as well?

Mr. Katz: We would have to impose quotas on all the exporting countries. If one major country refuses to sign the agreement, this could trigger quotas for all countries.

Ambassador Silva: Why can’t we have a gentlemen’s agreement? Say, for example, we decide in July or you decide in July to allocate seven or ten million pounds to Costa Rica. Do you have to explain to the Australians why you have done this?

Foreign Minister Facio: That wouldn’t be reducing their quota. It would just be giving something to us.

Mr. Katz: About 40% of Australia’s exports to the U.S. are meat. The question of meat exports poses a major political problem for them. It was a campaign issue last December for their new ruling party. The new party criticized the Liberal Party for having given up an additional share to the Central American countries last year. This was another reason why they refused to negotiate any concessions this year. We pressed them very hard on maintaining the share formula and including a regional shortfall reallocation provision. We threatened to go to quotas if they did not accept this. They said they wouldn’t sign such an agreement. The Department has been criticized by the U.S. cattlemen for delaying because of this attempt to negotiate with Australia. The Australians and the cattlemen have gone to the press.

The Secretary: How about the idea that has just been mentioned here? We could sign the agreements and then give some small amount to Costa Rica.

Mr. Katz: That would be breaching our agreements with other countries. According to the agreements, any shortfall would be distributed in a pro rata manner.

[Page 430]

Foreign Minister Facio: We are not speaking of shortfalls, but of a small increase.

Mr. Katz: That would put us over the trigger point.

The Secretary: Suppose it doesn’t?

Foreign Minister Facio: You won’t go over with 7 million pounds.

Mr. Katz: We need the cushion because of other leakages. Panama is an example.

The Secretary: Of course, if Reagan becomes President there will be no problem. We could give the Costa Ricans the Panamanian quota. (laughter)

Mr. Katz: We may be better off just going to quotas.

Foreign Minister Facio: Panama’s production is not so good.

Mr. Rogers: They are already at the restraint level.

Mr. Katz: They are already over their level. Last year we went over the restraint level. We must have a little leeway this year.

Ambassador Silva: One reason there is no increase for us this year is this year Canada was allocated 70 million pounds, whereas last year they exported 20 million pounds. The Canadian allotment took up all of the increase.

Mr. Katz: This is just going back to historic levels with Canada.

The Secretary: When was the decision on country allocations made?

Mr. Katz: The allocation formula was taken from last year’s share formula.

The Secretary: Plus a multiple percentage of what was done in the period of President Monroe.

(laughter)

Ambassador Silva: Our program is very small. Australia and New Zealand account for approximately 9 hundred million pounds of meat exports to the U.S.

The Secretary: How much is your allocation?

Ambassador Silva: About 54 million pounds.

The Secretary: Certainly I can’t do anything at this meeting. My advisors will only tell me that we have been handling things this way since Jefferson.

Mr. Katz: The program has been in effect only since 1968.

The Secretary: I would like to do something. I will study this question with a view to seeing if we can figure something out. Probably we will not be able to. I have received unanimous advice that we cannot do anything about this. I personally would like to set up something better [Page 431] for our special friends. Of course, Australia is also a good friend. Isn’t there a son of a bitch in the group?

(laughter)

Mr. Katz: The EEC—We have instituted countervailing duties against Ireland.

The Secretary: Do you think I have a special affinity for the Irish? A national or religious affinity? Of course my wife is Irish.

Mr. Katz: Well, there you are.

The Secretary: Let me take a look at it. How much do you want, ten million pounds? (Others nod agreement) Probably nothing can be done, but I will tell you in Santiago.

Mr. Rogers: We are making up for this with other things.

The Secretary: The trouble with Facio is that he supports us on everything. You have been a very good friend.

Foreign Minister Facio: I will continue to be a good friend. I don’t believe that one should behave badly just to get something. Our positions on the OAS are in agreement. I have discussed this matter with Bill.

[Omitted here is discussion of OAS matters.]

The Secretary: I will take another look at the meat problem, but it looks like it can’t be solved.

[Omitted here is discussion relating to Belize and Panama.]

  1. Summary: Kissinger and Facio discussed Costa Rica’s desire for an adjustment to the quota imposed on its meat exports to the United States.

    Source: National Archives, RG 59, Central Foreign Policy File, P820117–2496. Confidential; Nodis. Drafted by Bova on May 28 and approved by Haley Collums in S on July 1. All brackets are in the original except those indicating text omitted by the editors. The meeting was held in the Secretary’s office. In telegram 106745 to San José, May 2, Rogers transmitted a letter to Facio regretting the Department’s inability to persuade Australia and New Zealand to accept the reallocation of unused Latin American meat quotas, which would have benefitted Costa Rica. (Ibid., D760168–0867) In telegram 2183 from San José, May 4, the Embassy reported Facio’s announcement that Costa Rica would not sign the “unjust” voluntary restraint agreement and would seek better terms. (Ibid., D760172–0913) In telegram 126396/Tosec 130179, May 22, the Department reminded Kissinger of Costa Rica’s desire for adjustments to the voluntary restraint program and suggested that he should convince the Costa Ricans that he considered it a serious problem. (Ibid., D760199–0528) In telegram 2582 from San José, May 24, the Embassy observed that Facio and Oduber believed that Kissinger had made a commitment during his February visit to Costa Rica to try to arrange a higher meat quota for their country. (Ibid., D760201–0718)