Monday, Sep. 03, 1934

First Surprise Package

At 5 o'clock every good diplomat should be at the tea table. At 5 o'clock one afternoon last week five diplomats were sitting down in the State Department to pen and ink. There were Dr. Cosme de la Torriente. Cuban Secretary of State, Dr. Manuel Marquez Sterling, Cuban Ambassador to Washington, and Secretary Hull. There also were Assistant Secretary Sumner Welles and Jefferson Caffery, the past and present Ambassadors to Cuba. Their purpose was to set their hands and seals upon the first reciprocal trade agreement negotiated under the new tariff bargaining law (TIME, June 18). A few minutes later President Roosevelt at the White House proclaimed that the new tariffs on Cuban products would go into effect in ten days.

Instructive was the whole proceeding. Secretary Hull announced that discussions of the trade agreement had been going on for twelve months, but it was obvious that the actual bargain must have been whipped into shape in about two months. Only hearing was a three-day session in Washington during July, but there was no public or political wrangle for the good reason that nobody knew what the terms of the forthcoming agreement were. In Cuba and Washington, manufacturers, producers, importers, were given informal hearings. No sworn testimony was taken. Interested parties were allowed to present their views, claims and kicks off the record. Then Assistant Secretary Sumner Welles and his Cuban friends drew up a "treaty" to the ratification of which the Senate does not have to advise and consent. Only when it was signed and had become the law of the land was it made public for the first time.

Quid Pro Quo. Only four tariff concessions did the U. S. make to Cuba: 1) a reduction from 1 1/2 to 9-c- a lb. on raw sugar; 2) a reduction from $4 to $2.50 a gal on Cuban rum; 3) reductions upwards of 50% on Cuban cigars and tobaccos; 4) reductions averaging about 50% on grape- fruit, lima beans, potatoes, tomatoes, cucumbers, eggplant, okra, peppers and squash.

More notable were the restrictions with which these reductions were hedged about. Cuba's exports of sugar to the U. S. are already quoted by law at 1,900,000 tons a year and tariff reduction will therefore not lead to an increase in the amount of Cuban sugar imported. The reductions in tobacco tariffs are conditioned upon a limitation of Cuban exports to the U. S. to an amount not exceeding 18% of the U. S. consumption during the previous year. And the tariff reductions on fresh fruits will only be effective during the months in which they are out of season in the U. S.

Against these concessions by the U. S., Cuba made a much longer list of tariff reductions on goods from the U. S.: on lard. from $9.18 per cwt. to $2.73 and two years from now down to $1.45; on cottonseed and soya bean oil, from $4.36 per cwt. to 88-c-; on wheat flour, from 76-c- to 35-c- per cwt.; on hams, from $8.72 to $5.45; on potatoes, from $1.81 to 90-c-; on low-priced automobiles, from 24% to 12% ad valorem; on cast iron pipe, from 85-c- to 74-c-; on cigarets, from $4.50 plus 25% ad valorem to $1.81 plus 20% ad valorem. Cuba also agreed to increase present U. S. tariff preferences on textiles, cotton, silk and rayon; on radios and many kinds of machinery; on electric light bulbs, paper, cellophane, chemicals, glass, hides, rubber goods and tires, cameras, films, oilcloth. Not so lopsided was the bargain as it seemed. Sugar is Cuba's chief product and tariff reduction will save her sugar producers $22,824,000 which otherwise they would have had to pay in import duties.

Significance. Economists do not look for any overnight change in Cuban trade. They expect the lowering of duties to be only gradually reflected in increased business between the two countries. Ten years ago Cuba bought nearly $200,000,000 worth of goods from the U. S., last year not much over $20,000,000. If in three years half of this loss can be recovered by trimming down tariff walls, the tariff bargainers will have good arguments for continuing their work.

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