Foreign Relations of the United States, 1969–1976, Volume E–11, Part 1, Documents on Mexico; Central America; and the Caribbean, 1973–1976

301. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Ford¹

Washington, August 19, 1975.

SUBJECT

• Third-Country Sanctions against Cuba

With the deterioration in our relations with Castro in the early 1960s, we began to impose a series of restrictions on trade and travel between the U.S. and Cuba. Then, in 1962 and 1964, the OAS at our urging passed resolutions obliging its members to place similar sanctions on contacts with Cuba. Partly on the basis of the OAS action, the U.S. imposed further punitive measures against those countries which engaged in trade or permitted their ships or planes to be used in transport to or from Cuba.

These third-country sanctions consist of the following measures:

—Executive regulations prohibiting trade with Cuba by subsidiaries abroad of U.S. companies;

—Legislation requiring the Executive to terminate economic and military assistance to any country permitting its ships and planes to engage in the transfer of goods to or from Cuba;

—Legislation denying P.L. 480 Title I programs to countries permitting their vessels or planes to trade with Cuba or engage in government trade with it;

—Executive regulations prohibiting the bunkering in U.S. ports of ships engaged in the Cuba trade.

On July 29, the OAS Conference meeting in San Jose, Costa Rica, voted by two-thirds majority, including the U.S., to permit its members to terminate the obligatory sanctions on trade, travel and diplomatic contact with Cuba, and allow each nation to follow its own policies in this matter. As a result, the political and legal justification for our sanctions against those countries deciding to trade with Cuba has been removed. Furthermore, our support for the resolution carried with it a presumption that we will refrain from taking punitive action against a country which takes an action based on it. We have also found that our regulations prohibiting trade with Cuba by foreign subsidiaries of U.S. companies in countries where such trade is permitted create resentment and friction with otherwise friendly countries and place U.S. investors abroad in a difficult position between conflicting policies and regulations. Friendly foreign governments point out that the extraterritorial application of U.S. laws and regulations to prevent trade with Cuba violates their sovereignty.

I therefore propose that we take steps to modify those regulations and laws imposing sanctions on third countries as soon as possible in order to make clear that we are implementing an OAS action passed by the overwhelming majority rather than taking a step towards Cuba. I believe, however, these steps will be recognized as constructive ones by Castro and will put the onus on him to take the next conciliatory gestures towards us. Our purely bilateral sanctions would be left intact.

Attached at Tab A is a Department of State memorandum recommending that you approve the termination of U.S. third-country sanctions by modifying current regulations and laws relating to third-country trade with Cuba. The proposed modifications are laid out in the Under Secretaries Memorandum to you of February 25, 1975 (also at Tab A).

In brief, the specific steps which I would propose taking now are the following:

1. Licenses for U.S. subsidiaries. It is our current policy to consider each application for a license to permit a foreign subsidiary of a U.S. company to trade with Cuba on a case-by-case basis, and for the most part, to refuse to issue them. As a result of threats to nationalize U.S. subsidiaries in Argentina if they did not conform with Argentine policy of trading with Cuba, President Nixon authorized exceptions in the case of Argentine subsidiaries of U.S. automobile manufacturers in early 1974. A few other exceptions have been made in the case of Canadian and Mexican subsidiaries of U.S. firms. These exceptions have received considerable publicity and, as a result, more applications have been submitted which are now pending.

The Under Secretaries Committee, including representatives of State, Defense, Commerce, Treasury and CIA has met to review this problem and is unanimous in recommending that we begin issuing licenses permitting subsidiaries to trade with Cuba when it is the policy of the local government to do so. We would continue to deny licenses for strategic goods or for goods in which there was a substantial proportion of component parts manufactured in the United States. The licensing of American banks located abroad also would continue to be more stringently restricted than that of non-banking firms in order to avoid providing U.S. financial assistance to Cuba.

2. Assistance to countries trading with Cuba. The Foreign Assistance Act contains a waiver provision. The proposal therefore is that, as Secretary of State, I would waive the suspension of assistance under the Foreign Assistance Act for countries which permit their ships and aircraft to carry goods to or from Cuba, when that becomes necessary. This was done recently with Argentina, without public attention having been called to it. It may become necessary with Panama, but not until they actually engage in the trade.

3. P.L. 480 Title I. We would begin informal discussions with appropriate members of Congress aimed, at a minimum, at seeking broader waiver authority of the requirement to suspend P.L. 480 Title I food shipments to countries trading with Cuba.

4. Bunkering. The Commerce Department would take the necessary action to change their regulations to lift bunkering restrictions on non-U.S.-flag vessels in the Cuba trade.

These actions would be taken in as low-key a manner as possible. The changes in regulations involved in issuing the waiver and licenses to subsidiaries of U.S. companies and permitting bunkering would be published in the Federal Register. We would advise countries like Canada, Britain and a few others which have been pressing us to permit U.S. subsidiaries located within their boundaries to trade with Cuba, and we would issue licenses for applications which are pending. A low-key press statement tying the actions to implementation of the OAS decision at San Jose would have to be made. It would be made clear at the same time, however, that restrictions on U.S. trade and travel remain in effect as long as outstanding problems with Cuba remain unresolved.

Recommendation

That you approve modifying those regulations and laws imposing sanctions on third countries that trade with Cuba.

1. Summary: Kissinger recommended that U.S. regulations imposing punitive measures on third countries that engaged in trade with Cuba be modified or repealed in light of the resolution passed at the San José meeting of OAS Foreign Ministers in July.

   Source: Ford Library, National Security Adviser, NSC Latin American Affairs Staff Files, 1974–1977, Country Files, Box 2, Cuba—Economic, Social—Sanctions 3. Confidential. Ford initialed the memorandum and approved its recommendation. No attachments were found, but the documents described as attachments include a February 25 memorandum from Ingersoll to Ford and an August 12 memorandum from Kissinger to Ford. (Ibid., Cuba—Economic, Social—Sanctions 2; and ibid., Presidential Country Files for Latin America, 1974–1977, Box 3, Cuba 2) In telegram 3187/USDel 50 from San José, July 30, published as Document 33, the Embassy reported on the OAS Foreign Ministers’ lifting of mandatory regional sanctions on Cuba. In an August 21 statement, the Department announced modifications to its Cuba denial policy, noting that in the future licenses would be granted for “transactions between U.S. subsidiaries and Cuba for trade in foreign-made goods when those subsidiaries are operating in countries where local law or policy favors trade with Cuba.” (Department of State Bulletin, September 15, 1975, p. 404)