Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

398.2544/2–1054

Memorandum by the Director of the Office of Philippine and Southeast Asian Affairs (Bonsal) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)¹

confidential

Washington, February 10, 1954.

• Subject:
• International Tin Agreement

Problem

Assistant Secretary Waugh may call you to inquire whether you would support a Departmental effort to have the NSC reconsider its action of February 4² to the effect that the United States should not participate in the International Tin Agreement. (If he does so he will probably seek the views of the Assistant Secretaries for European Affairs and Latin American Affairs at the same time.)

Discussion

1. Economic affairs officers in E believe that the NSC action was taken without adequate consideration of the matter within the Department of State or elsewhere and was based upon a misunderstanding of the extent to which the Department had earlier concurred in recommendations which had been submitted by the Director of the Office of Defense Mobilization.

2. Sixty percent of the world’s tin is produced in the countries of Southeast Asia. Embassy Djakarta and Consulate General Singapore (Embtels 845 and 430, see Tab A attached)³ have both indicated that “US accession [to the International Tin Agreement] seems inexpensive way demonstrate US good will towards Southeast Asia and interest and recognition problems. …”⁴

3. Past US Government tin purchasing practices and policies have made US tin policy a matter of friction in our relations with Indonesia, Malaya and Thailand.

4. According to Embassy Djakarta, US signature of the tin agreement “if well timed, would probably improve bilateral diplomatic atmosphere for short period and might help counteract pressures for increased trade with China and USSR”.

5. Both Singapore and Djakarta state that if US accession to the agreement proves to be contrary to US policy, it would be most desirable for the US to adopt a sympathetic attitude of “benevolent nonparticipation”.

6. The U.S. Government participated in the drafting of International Tin Stabilization Agreement, which is now open for signature. The agreement would not cost the US anything other than a nominal contribution to the administrative costs. The contributions to the tin buffer stock would be made entirely by the tin-producing countries themselves. When their existing buffer stock becomes filled, the agreement provides that price stabilization is to be effected by curtailing production in the producing countries. Since tin metal is an insignificant portion of the cost of most of the products in which tin is used, it is unlikely that a tin stabilization agreement could have any significant effect upon the US domestic prices of these finished goods.

7. According to Mr. Figgis, former Chairman of the Board of the American Can Company and head of the recent US Tin Delegation, American manufacturers who use tin are much more interested in being assured of a regular supply than in the price of tin. He has concluded that the proposed International Tin Agreement would help assure a regular supply.

8. If the US refuses to participate in the agreement, and the agreement becomes effective by the acceptance of a sufficient number of other governments, the US will be criticized for its refusal to cooperate. Nonparticipation would be interpreted abroad as disapproval. Nonparticipation may very well discourage other governments from signing and bringing the agreement into force. The United States would then be blamed not only for its part in creating the basic problem by the American stockpile program, but also for blocking action which would ease the readjustment now that the stockpiling has ended.

9. The proposed agreement is a practical means of preventing deep depression in the tin industry. No effective alternative has been proposed. Participation in the agreement would not impose an appreciable burden on the United States. Our participation would be welcomed by all of the tin-producing countries as tangible recognition of a difficult problem and a willingness to cooperate in international action to solve it.

10. The Administration has recognized in sugar and wheat that an intergovernmental commodity agreement may be justified in an exceptional case of special difficulties. The need for international regulation is particularly strong in tin and the obligations which would devolve upon the United States as a participating government are minimal. Unless, therefore, the United States is prepared to sign the tin agreement, it is difficult to imagine a willingness to consider participation in any agreement for a commodity (e.g., rubber) which is not produced in this country.

11. The underdeveloped countries led for the most part by Southeast Asian countries have in almost every international forum—the UN, ECOSOC, ECAFE, and the Colombo plan—pleaded for international stabilization of raw material prices. Since the Korean war price “boom” ended the terms and balance of trade have turned sharply against all the underdeveloped countries. This has contributed markedly to their internal instability and has enhanced the position of the Communist wing (e.g. Indonesia). Rightly or wrongly there is a widespread belief that the United States was directly responsible for the boom and bust. United States prestige throughout the entire area has suffered severely as a consequence. Failure of the United States to participate in a stabilization scheme which cannot cost the United States anything (aside from a nominal contribution to administrative cost), would be a direct victory for all the anti-American forces in the area.

Recommendation

It is recommended that you advise Mr. Waugh that FE believes that for strongly compelling political reasons the United States should sign the international tin agreement, and that accordingly FE would be pleased to join with E in a request to have the NSC reconsider its action.⁵

1. Drafted by Leonard S. Tyson of the Office of Philippine and Southeast Asian Affairs.
2. See the memorandum of discussion of that date, supra.
3. Neither printed; telegram 845 from Djakarta, Feb. 6, 1954, predicted a bitter reaction from Indonesia if the tin decision were not changed; telegram 430 from Singapore, Jan. 30, 1954, reported that the Malayan Government was very disappointed in the recommendation by the Randall Commission that the United States refrain from entering commodity agreements.
4. Brackets and ellipsis in the source text.
5. According to a letter from Clarence W. Nichols, Chief of the Metals and Minerals Staff, to Winthrop G. Brown, Deputy to the Minister for Economic Affairs at the Embassy in London, Feb. 26, 1954, the Department of State hoped to revive the issue of the tin agreement at the NSC meeting of Mar. 4. (398.2544/1–2854) There is no indication in the memorandum of discussion at the NSC meeting of that date that the issue was discussed. For the final position of the U.S. Government on the tin agreement, however, see circular telegram 314, Mar. 4, 1954, p. 1084.