Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

411.9631/12–2953: Telegram

No. 349
The Secretary of State to the Embassy in the Philippines

confidential

Washington, December 30, 1953—3:38 p.m.

1669. Part I.

Would appreciate soonest Embassy comments preliminary Dept proposal set forth in Part II re trade agreement. Essential no discussion this proposal with other than Embassy officials since not yet discussed with other agencies Interdepartmental Committee or Congressional leaders as noted Deptel 1652.¹ In developing this proposal Department while cognizant political aspects of U.S. position on US–Phil relations has had also take into account following essential factors:

a. Conflict of interests expressed by various sectors of business community (foreign traders versus domestic producers of articles competing with Philippine imports). This also reflected in positions of agencies represented on Interdepartmental Committee. (For example indicated positions range from no change desirable in present act to willingness postpone application of partial duties in exchange for new Philippine concessions.) Also third country concern, particularly Cuban sugar producers.

b. Impossibility predicting what might be outcome any proposal to Congress for even limited modification tariff provisions present Act. Strong possibility result might be place Philippines in less desirable position in US market than under present act.

c. Attempt to revise trade provisions of 1946 Act would probably prejudice favorable Congressional action on overall trade program with results unfavorable to Philippine interests as well as administration’s overall objectives. Moreover, considered infeasible add another major item such as modification Philippine Trade Act to already heavy legislative program anticipated forthcoming session.

Part II.

U.S. would indicate prepared consult with Phil Govt re proposals for supplementing or otherwise revising non-tariff provisions TA as appropriate and mutually desirable. Dept believes in number instances present provisions TA might be improved, for example, immigration, exchange, quantitative restrictions and parity.

U.S. would also indicate following: Re tariff provisions of present Agreement studies indicate coming into force of declining preferential arrangement not likely to have short-run overall adverse effects on Philippine exports to United States. Effect of declining preference on United States exports to Philippines less clear, especially since future level of MFN rates in the Philippines currently being reviewed by Phil Govt. In no event does there appear to be any likelihood immediate serious adverse effects on economy either country by coming into force of declining preference arrangement. Any alternative unless carefully worked out in light international obligations, as well as any straight extension of duty free trade period, not likely be well received by third countries to whom we have announced in GATT and elsewhere our intention eliminate U.S.-Philippine preferences. The United States recognizes desirability keeping U.S.-Philippine tariff relations under close study, however, and suggests establishment continuing joint review effects operation of presently prescribed tariff arrangement.

This Government prepared to join Phils in undertaking above tasks at early date. Must caution, however, U.S. Congress unlikely act on any revision this year even if proposed by Executive Branch.

Part III.

Believe foregoing substantially replies paras 1 and 2 Embtel 1429.² For reasons outlined Part I above Dept considers not feasible propose legislation defer application duties. Will reply para 3 separately after necessary interagency clearance.³

Dulles

1. Not printed.
2. Telegram 1429 expressed the Embassy’s concern that the Department did not seem to be moving ahead rapidly enough with revision of the trade agreement and with proposed legislation for Congress dealing with deferral of application of the duties scheduled to go into effect after July 4. (411.9631/12–2953)
3. In paragraph 3 of telegram 1429, the Embassy requested discretionary authority to disseminate material which would help to discredit the myth that Philippine exports to the United States would face disaster if they were subjected to progressively increasing tariffs as provided for in the existing agreement. In telegram 1691 to Manila, Jan. 4, 1954, the Department indicated that it had no objection.