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Cuba - Trade Liberalization
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Cuba - Trade Liberalization
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John O. Marsh Files (Ford Administration)
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The original documents are located in Box 11, folder "Cuba - Trade Liberalization" of the
John Marsh Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 11 of The John Marsh Files
at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
Jach- attached is the
Dave Mardonald item
I mentioned to you.
Because of the
disions problems to
which this intuation
may girl rise, I would
suggest that you mention
the problem at Mondaye
Annor ,Haff meeting and
alert Nesseu today,
also provide copies
/
THE WHITE HOUSE
WASHINGTON
to Breat Acceroft.
(copies attached)
Russ
OF THE
THE 1789 TREASURY
DEPARTMENT OF THE TREASURY
MAR 2⁶ 1976
WASHINGTON, D.C. 20220
ASSISTANT SECRETARY
i MAR 25 1976
MEMORANDUM FOR: John O. Marsh, Jr.
Counsellor to the President
FROM:
David R. Macdonald
Dem
Assistant Secretary (Enforcement,
Operations, and Tariff Affairs)
SUBJECT:
Inquiry on Cuban Trade by Senators
Jackson and Bentsen
I believe you should be aware of this infor-
mation which we supplied in response to the Senators'
requests, since they may use it to criticize the
Administration's policies with respect to Cuba.
We have explained to the extent possible that
the liberalization stemming from State Department
recommendations following the OAS meeting last summer
has resulted in transactions beneficial to U. S.
firms without being of strategic benefit to Cuba.
We have also sought to establish on the record the
fallacies in drawing unqualified conclusions from the
data.
FORD & LIBRARY 076839
copresto. nessen &cowcroft -3/26/76-FYI/RTag.
DEPARTMENT
OF
3HL
THE
TREASURY
DEPARTMENT OF THE TREASURY
1789
WASHINGTON, D.C. 20220
ASSISTANT SECRETARY
MAR 24 1976
Dear Senator Jackson:
I am pleased to send you, in response to a recent
request from your office, data regarding licenses au-
thorizing trade with Cuba by foreign affiliates of American
firms, covering the period since the policy change of
August, 1975.
In your interpretation of these data you should be
aware of a number of qualifications. First, licenses are
not approved for the sale to Cuba of strategic commodities
under international (NATO) embargo. Also, licenses are
not issued for the sale to Cuba of United States-origin
production technology. These policies are set forth in
the licensing guidelines published on October 8, 1975
(Sec. 515.559 of the Regulations, copy enclosed).
In many instances, too, proposals are discussed with
Treasury, in advance of filing, by U.S. firms whose foreign
affiliates may be considering trade with Cuba. To a sub-
stantial extent, therefore, applications for licenses are
filed only in cases where the U.S. firm feels it probable
that the application meets the published guidelines and
will be approved. Thus, the percentage of licenses ap-
proved may not accurately reflect responsiveness to the
interest of U.S. firms in potential Cuban trade by sub-
sidiaries, or the number of cases which might have been
denied for strategic reasons if filing had occurred.
Of the licenses which have been issued, licenses for
$98.5 million involved sales of foreign rice, corn and
flour to Cuba. In these cases, the U.S. -controlled foreign
firm was a commodity broker, rather than a manufacturer.
The Cubans could just as readily have purchased these
grains from competitive commodity brokerage firms which
are not U.S.-controlled.
-2-
The dollar value datum is also subject to qualifi-
cation. In some cases applications specified a quantity
(such as 17,000 tons of flour) rather than a dollar value
for the transaction. In other cases, applications re-
quested authorization for expenditures in Cuba incidental
to a salesman's travel there, and no dollar value was
specified. Again, the dollar value specified in some
applications was variable, dependent on the size of the
final order received. None of these cases is included in
the dollar value datum in the enclosure.
Finally, the total dollar value of licenses issued
does not necessarily equate with the actual trade trans-
actions consummated, which may be less. We try to issue
licenses for exports only in cases where there is a firm
agreement for a transaction; nevertheless, license trans-
actions may ultimately not be consummated, often for purely
commercial reasons. As an example, a license was issued
for a $13 million sale of steam generating boilers to Cuba,
but a non-American competitor eventually received the order.
I hope that, notwithstanding these limitations, you
will find the enclosed data useful for your purposes.
Sincerely yours,
One Releard
Assistant Secretary
(Enforcement, Operations
and Tariff Affairs)
The Honorable
Henry M. Jackson
United States Senate
Washington, D. C. 20510
Enclosure
Licenses for U.S.-Controlled Subsidiaries to Trade with Cuba
October 8, 1975 - January 31, 1976
Applications filed
121
Approved
83
Denied
5
No action b/
31
Cancelled by applicant
2
Total value of transactions for which
licenses approved
$166,500,000
Number of U.S. parent firms which
applied for licenses
95
Number of third countries involved
23
These cases were denied for one of the following reasons:
(1) U.S. citizens were to travel to Cuba;
(2) Goods were to be imported from Cuba into a country other
than the country where subsidiary was located;
(3) American parent arranged the transaction;
(4) Involved travel to negotiate sale of strategic goods.
b No action taken on application because no license was
required for the proposed transaction (in negotiating
stage only) or application was filed incorrectly (wrong
applicant or incomplete information).
OF
THE TREASURY THE DEPARTMENT
DEPARTMENT OF THE TREASURY
1789
WASHINGTON, D.C. 20220
ASSISTANT SECRETARY
MAR 24 1976
Dear Senator Bentsen:
I am pleased to send you, in response to a recent
request from your office, data regarding licenses au-
thorizing trade with Cuba by foreign affiliates of American
firms, covering the period since the policy change of
August, 1975.
In your interpretation of these data you should be
aware of a number of qualifications. First, licenses are
not approved for the sale to Cuba of strategic commodities
under international (NATO) embargo. Also, licenses are
not issued for the sale to Cuba of United States-origin
production technology. These policies are set forth in
the licensing guidelines published on October 8, 1975
(Sec. 515.559 of the Regulations, copy enclosed).
In many instances, too, proposals are discussed with
Treasury, in advance of filing, by U.S. firms whose foreign
affiliates may be considering trade with Cuba. To a sub-
stantial extent, therefore, applications for licenses are
filed only in cases where the U.S. firm feels it probable
that the application meets the published guidelines and
will be approved. Thus, the percentage of licenses ap-
proved may not accurately reflect responsiveness to the
interest of U.S. firms in potential Cuban trade by sub-
sidiaries, or the number of cases which might have been
denied for strategic reasons if filing had occurred.
Of the licenses which have been issued, licenses for
$98.5 million involved sales of foreign rice, corn and
flour to Cuba. In these cases, the U.S.-controlled foreign
firm was a commodity broker, rather than a manufacturer.
The Cubans could just as readily have purchased these
grains from competitive commodity brokerage firms which
are not U.S.-controlled.
-2-
The dollar value datum is also subject to qualifi-
cation. In some cases applications specified a quantity
(such as 17,000 tons. of flour) rather than a dollar value
for the transaction. In other cases, applications re-
quested authorization for expenditures in Cuba incidental
to a salesman's travel there, and no dollar value was
specified. Again, the dollar value specified in some
applications was variable, dependent on the size of the
final order received. None of these cases is included in
the dollar value datum in the enclosure.
Finally, the total dollar value of licenses issued
does not necessarily equate with the actual trade trans-
actions consummated, which may be less. We try to issue
licenses for exports only in cases where there is a firm
agreement for a transaction; nevertheless, license trans-
actions may ultimately not be consummated, often for purely
commercial reasons. As an example, a license was issued
for a $13 million sale of steam generating boilers to Cuba,
but a non-American competitor eventually received the order.
I hope that, notwithstanding these limitations, you
will find the enclosed data useful for your purposes.
Sincerely yours,
Assistant Secretary
(Enforcement, Operations
and Tariff Affairs)
The Honorable
Lloyd Bentsen
United States Senate
ATTN: Ms. Sally Shelton
Washington, D. C. 20510
Enclosure
Licenses for U.S.-Controlled Subsidiaries to Trade with Cuba
October 8, 1975 - January 31, 1976
Applications filed
121
Approved
83
Denied
5
No action b/
31
Cancelled by applicant
2
Total value of transactions for which
licenses approved
$166,500,000
Number of U.S. parent firms which
applied for licenses
95
Number of third countries involved
23
These cases were denied for one of the following reasons:
(1) U.S. citizens were to travel to Cuba;
(2) Goods were to be imported from Cuba into a country other
than the country where subsidiary was located;
(3) American parent arranged the transaction;
(4) Involved travel to negotiate sale of strategic goods.
No action taken on application because no license was
required for the proposed transaction (in negotiating
stage only) or application was filed incorrectly (wrong
applicant or incomplete information).
due: 9/3[1975]
THE WHITE HOUSE
WASHINGTON
Jack,
May I have your concurrence
on the attached NSDM which
reflects the President's
decision per the attached memo.
Les Janka
apout for
point
called 9/3
9:45
al
CONFIDENTIAL - GDS
THE WHITE HOUSE
WASHINGTON
National Security Decision Memorandum
TO:
The Secretary of the Treasury
The Secretary of Defense
The Secretary of Agriculture
The Secretary of Commerce
The Deputy Secretary of State
The Administrator, Agency for International Development
SUBJECT:
Termination of U.S. Restrictions on Third Countries
Trading with Cuba
Following the meeting of the Organ of Consultation of the Organization
of American States in San Jose which terminated mandatory prohibitions
against trade and other contacts with-Cuba, the President reviewed
recommendations concerning U.S. legislation and regulations relating
to other countries' contacts with Cuba. He has decided that in view
of the OAS action, the U.S. should take such actions as are necessary
to terminate its restrictions on third countries that trade with Cuba.
The steps should include the licensing of subsidiaries abroad of U.S.
companies to trade with Cuba when it is the policy of the local
government to do so and when the goods involved are non-strategic
and do not contain a substantial proportion of component parts
manufactured in the U.S.; relief from legislation requiring
termination of assistance or provision of PL 480 Title I programs to
countries permitting their ships or planes to engage in trade with
Cuba; and modification of regulations prohibiting bunkering in U.S.
ports of ships engaged in Cuba trade.
The Under Secretaries Committee should be responsible for
coordination of the implementation of this NSDM. When appropriate
it should make clear that the actions taken are in conjunction with
the OAS Resolution rather than our bilateral policies towards
Cuba. All actions taken by the Under Secretaries Committee under
this NSDM should be reported to the President through the Assistant
to the President for National Security Affairs.
cc:
Director, Central Intelligence Agency
Chairman, Joint Chiefs of Staff
(H.A.K.)
Chairman, Under Secretaries Committee
CONFIDENTIAL - GDS
1/9/86
CONFIDENTIAL
1202
THE WHITE HOUSE
WASHINGTON
August 19, 1975
MEMORANDUM FOR: THE PRESIDENT
FROM:
HENRY A. KISSINGER
ANY
SUBJECT:
Third Country Sanctions against Cuba
With the deterioration in our relations with Castro in the early 1960's,
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
these 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 PL 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
DECLASSIFIED
E.O. 12355, Sec. 3.4.
MR 89-40, #16 State Hr. 12/26/89
CONFIDENTIAL
By KBH NARA, Date 2/1/90
SECRET ATTACHMENT
CONFIDENTIAL
2
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.
GONFIDENTIAL
CONFIDENTIAL
3
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. PL 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 PL 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.
CONF IDENTIAL
CONFIDENTIAL
4
RECOMMENDATION
That you approve modifying those regulations and laws imposing
sanctions on third countries that trade with Cuba.
Approve net
Disapprove
CONFIDENTIAL
THE WHITE HOUSE
WASHINGTON
February 5, 1963
NATIONAL SECURITY ACTION MEMORANDUM NO. 220
TO:
The Secretary of State
The Secretary of Defense
The Secretary of Agriculture
The Secretary of Commerce
The Administrator, Agency for International
Development
The Administrator, General Services Administration
SUBJECT: U.S. Government Shipments by Foreign Flag Vessels
in the Cuban Trade
At its meeting on February 5, 1963, the Executive Committee of
the National Security Council considered United States policy with
respect to shipments financed by the Departments of State, Defense,
and Agriculture, General Services Administration, and the Agency
for International Development on foreign flag ships engaged in the
Cuba trade. The President approved the recommendation that
such cargoes should not be shipped from the United States on a
foreign flag vessel if such vessel has called at 2 Cuban port on
or after January 1, 1963. The President agreed that an exception
may be made as to any such vessel if the persons who control the
vessel give satisfactory assurance that no ships under their con-
trol will, thenceforth, be employed in the Cuba trade so long as
it remains the policy of the United States Government to discourage
such trade. The Secretary of State is to be consulted on the form
and content of any such assurances,
The Secretaries of State, Defense, and Agriculture, the Administrator
of AID, and the Administrator of GSA were directed to take such steps
as may be necessary to carry out this policy.
The Secretary of Commerce is to make available to the appropriate
Departments current pertinent information which he may have on
ships engaged in the Cuba trade.
Include Brinf
McGeorge Bundy
cc: Members of the Executive
December 16, 1963
MEMORANDUM TO HOLDERS OF NSAM 220
SUBJECT: Amendment to NSAM 220 of February 5, 1963 Relating to
United States Government Shipments by Foroign-Flag
Vessels in the Cuban trade.
The following amendment to NSAM 220 has been approved:
An exception to the prohibitions stated in NSAM 220 may be made as to any
vessel or vessels if the persons who control the vessel or vessels give cat-
isfactory assurance
(a) that no ships under their control will thenceforth be employed
in the Cuba trade, except as provided in paragraph (b); and
(b) that vessels under their control which are covered by contractual
obligations, including charters, entered into prior to the date of
this directive under which their employment in the Cuba trade
may be required, shall be withdrawn from such trado at the earliest
opportunity consistent with such contractual obligations.
The assurance given hereunder shall contain an undertaking that any ships
covered by paragraphs (a) or (b) will not thereafter be employed in the Cuba
trade so long as it remains the policy of the United States Government to dis-
courage such trade. No vessel described in paragraph (b) will be eligible to
carry any cargo sponsored or financed by any of the agencies listed herein
until such vessel has actually ceased to engage in the Cuba trade and has ceased
to be under obligation to engage in such trade.
The Secretary of State is to be consulted on the form and content of any assurances
given in accordance with this directive. If any assurance given in accordance
with this directive is determined to be untruc or has not been complied with, all
ships owned or controlled by persons making such assurance may be declared in-
eligible for the carriage of cargo sponsored or financed by any of the agencies
listed herein.
/s/
McGeorge Bundy