Memorandum by Henry A. Hoyt of the Office of Middle American Affairs to the Deputy Assistant Secretary of State for Inter‑American Affairs (Sparks)

CONFIDENTIAL [WASHINGTON,] December 6, 1954.

Subject: Overall Effects of Cuban Economic Talks‑ARA's Position

Re Requests for Increased Quotas.

Despite the fact that we were not able to give the Cubans anything concrete during the recent economic talks, and despite the fears of many of us that the talks should not have been held, I believe that the overall effect, in so far as the Cubans were concerned, was a good one. I believe the Cubans felt it had been worth their while to come to Washington, that they were able to make their case known to a good number of government officials, and that they left reassured that their position would be given consideration by the Executive Branch when the Sugar Act comes up in Congress. From conversations I had with several of the Cuban delegates, including Ing. Lopez Castro and Ambassador Joaquin Meyer,[1] on the eve of their departure, I believe the Cubans who formed the delegation left with the feeling that everything possible had been done for them and that their mission, given its limited scope, was a success.

In spite of the foregoing we should not be lulled into a feeling that the matter will rest there. We know that the domestic sugar producers as well as the other foreign producers are going to make a strong bid for increased quotas at the expense of Cuba when the Sugar Act comes up for consideration. If Cuba's quota is cut then I believe we are likely to have such a severe reaction from the Cubans that our relations with that country could drop to the lowest point in years. This will be true particularly should Cuba's quota be reduced because of increased allotments to the full duty countries.

Should the Cuban quota be cut, I fear that the overall effect of the recent economic discussions will prove to have been detrimental rather than helpful. Despite the Cubans' realization that we could not give them any concrete assurances, they went away from the recent talks believing they had a friend at court (the State Department). If their quota is cut the Cubans will point to these talks as an illustration of how the presentation of their problems was ignored or at least not given much weight.

Without going into details of the merits of the case, I believe we can agree that a reduction in Cuba's sugar quota will add greatly to the country's serious economic problems. The Batista Government would have a hard time explaining any further sugar cuts. The communists and the opposition political groups are already strong and are just waiting for an opportunity to further criticize the Batista Government. There is no more vulnerable spot than sugar and Batista might find it necessary to make a change in his cooperative attitude toward the U.S. in order to quiet domestic criticism.

Given the above, I do not think it is too early to start considering what ARA's position will be when the Sugar Act comes up for discussion. Since Peru, Panama, Dominican Republic, Haiti and Mexico are among the full duty countries which will be requesting increases, at Cuba's expense, we have a problem right in our own area. We can expect strong demands from these countries for increases. The Dominican Republic and Haiti have already indicated they feel entitled to increases and that Cuba's privileged position should be abolished.

While the Cubans are of course hopeful that the Department will take a strong stand in their favor against the requests of the domestic producers, I believe the Cubans realize that it is largely up to them to wage the battle against the domestic producers and gain Congressional support for Cuba's position. On the other hand, I believe the Cubans are counting almost entirely on the Department to support their case against the demands of the full duty countries.

Recommendation

After consultation with officers in MID and realizing that there are a lot of factors and arguments which cannot be brought out in a memorandum like this, MID makes the following recommendations

1. ARA take a strong stand against any change in the Sugar Act until its expiration on December 31, 1956.

2. Oppose increases in domestic quotas at Cuba's expense.

3. If there is any reduction in Cuba's quota because of increases granted to domestic producers, oppose any further reduction of Cuba's basic quota to satisfy the demands of full duty countries.

4. Support the thesis that any increase granted to full duty countries (if Cuba's quota is cut because of increases to domestic producers) be sought through adjustments in "increased consumption" quotas, rather than a reduction in Cuba's basic quota.

5. That ARA officers meet at an early date with officers from E and from Agriculture to discuss these problems.

The foregoing is controversial but it is felt that it is necessary to "get the ball rolling", and perhaps these recommendations can serve as a basis for the first discussions.

[1] Ambassador in Charge of Economic Affairs, Cuban Ministry of State.