Memorandum by Harvey R. Wellman of the Office of Middle American Affairs to the Deputy Assistant Secretary of State for Inter‑American Affairs (Woodward)

CONFIDENTIAL [WASHINGTON,] July 26, 1954.

Subject: U.S.‑Cuban Discussions on Economic Relationships.

In discussing this matter with Mr. Holland it is believed that you will want to examine the following considerations:

1. We have formally accepted the Cuban request for discussions in Washington. Copies of the Cuban note of April 26, of our reply and of the Cuban acknowledgement of our reply are attached.[1] Our acceptance of the Cuban proposal had the approval of the interested officers of the Departments of State, Agriculture and Commerce.

2. The Cubans are interested in "a joint and comprehensive study of all the economic problems that directly concern the relations of our two countries." This means, as Ambassador Concheso pointed out to me, that although the Cubans' principal concern will be sugar which comprises such a preponderant part of the Cuban economy, that will not be Cuba's exclusive concern. The Ambassador has emphasized that the Cuban Government is interested in the totality of economic relationships between Cuba and the United States.

3. It is recognized that discussions between Cuba and the United States which involve sugar will always be difficult for the Executive Branch because sugar legislation is a prerogative of the Congress. It is doubtful, however, that the timing for such discussions could ever be better than at present before definite decisions have been taken regarding long‑term sugar legislation and while the extension of the Sugar Act still has two more years to run.

4. The domestic sugar industry has proposed revision of sugar legislation on a permanent basis. The Cubans are naturally interested in having their sugar participation in this market‑defined and assured by international agreement. Such an agreement would have to have the support of the domestic industry and the approval of the Congress. The proposal to place sugar legislation on a permanent basis opens up a better possibility for defining Cuba's sugar rights in this market by international agreement. If the agreement of Cuba, the domestic industry and the Congress could be obtained the only remaining difficulty would be the participation of other foreign countries.

5. The objective of the proposed discussions in the words of the Cuban note is "a joint and comprehensive study". This does not imply negotiations or the giving of commitments. Cuba knows, and if there is any doubt it could be made clear at the beginning of the discussions, that the Executive Branch cannot commit the Congress in the matter of sugar legislation.

6. The proposed discussions would enable the United States to determine what Cuban objectives are in their economic relations with the United States and possibly also what their minimum requests would be with respect to sugar participation. This information would be of assistance to us in our discussions later in the year with the U.S. sugar industry with respect to a legislative program for sugar.

7. These discussions would also provide us an opportunity to indicate to the Cubans at a high level in the context of a discussion of our total economic relations our dissatisfaction with their handling of many situations and their violations of international trade commitments which are the quid pro quo for Cuba's special position in this sugar market.

8. It is important that we be willing to discuss these problems with Cuba even though we may reach no settlements and may simply indicate what the problems are and their interconnections. It might be detrimental to U.S.‑Cuban relations to inform them now that we do not wish to have the proposed Washington discussions because in view of the situation regarding sugar legislation we have no basis for negotiation. Such a reaction on our part might also damage the domestic political prestige of the Cuban Government which is an important consideration for President Batista at this time.

In reply to your inquiry, Ambassador Gardner arrived in Washington on July 23 and was planning to enter Georgetown Hospital for a complete check‑up. Ambassador Concheso arrives in New York on August 16 but intends to go directly to Habana returning to Washington early in September.

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