611.2131/71
The Chargé in Colombia (Dawson) to the Acting Secretary of State
[Received August 31.]
Sir: Referring to recent correspondence concerning the proposed reciprocal trade agreement between the United States and Colombia, I have the honor to transmit herewith translations of a petition8 submitted on August 8, 1933, to President Olaya and the Minister of Finance and Public Credit by the National Federation of Industrialists asking that the increased maximum tariff provided by Law 135 of 1931 (Legation’s despatch No. 3531 of December 22, 19318) be put into effect, that the Federation be consulted in deciding on tariff changes, and that Dr. Arturo Hernandez, a member of the Supreme Customs Tribunal, known for his protectionist sentiments, be appointed one of the Colombian technical experts in the negotiations for the proposed agreement.
This document is concrete evidence of the fact that Colombian manufacturers who have established or increased their business under the protection of Colombia’s high and artificial tariff barriers are becoming seriously disturbed at the possibility that the proposed trade agreement will adversely affect them. It is generally taken for granted that the United States will demand reduction of the duties on a number of manufactured items in return for a promise to maintain coffee on the American free list.
While the industrialist class in Colombia is a comparatively small one it is influential beyond its numbers by reason of comparative wealth. There seems little doubt, however, as to the position which the average public-spirited Colombian would take if a choice had to be made between protecting the coffee industry by securing the freedom of its principal market and protecting infant manufacturers by high tariffs. Much more Colombian capital is invested in coffee than in manufacturing and a much larger percentage of the population is dependent for its subsistence upon the former than upon the latter.
A leading coffee grower criticised the attitude of the industrialists as extremely short-sighted in conversation with me last week. He expressed the belief that if a duty were placed by the United States on coffee the principal result would be a reduction of the price paid the Latin American producer rather than an increase in that charged the American consumer. He argued that manufactured articles, domestic as well as imported, are bought in Colombia largely from coffee profits and that an American duty on coffee would thus be felt not only by the coffee industry but by the whole structure of Colombian [Page 222] national economy, including domestic manufacturers. This line of thought is probably typical.
On the other hand, advocates of high protection profess to consider: (1) that there is little chance that the American Congress would place a duty on coffee and that, consequently, substantial tariff concessions by Colombia would be a gift of something for nothing and (2) that even if a duty were established its effect on Colombia would be much less than is generally thought.
Respectfully yours,