The Secretary of State to the Ambassador in Cuba ( Caffery )

No. 118

Sir: Reference is made to despatch No. 220 of April 9, 1934,4 in which you inquire whether the following provision in the pending tariff bill is to be interpreted as meaning that no duty might be placed on Brazilian coffee:

“No proclamation shall be made increasing or decreasing by more than 50 per centum any existing rate of duty or transferring any article between the dutiable and free lists”.

Under the above provision the Executive would not be permitted to transfer articles from the free to the dutiable lists, but this does not mean that Congress might not do so. It is recognized, however, that a provision for transferring articles from the free to the dutiable list by Executive action would have a certain persuasive value in negotiating with such countries as Brazil, and careful consideration has been given to recommending the inclusion of such a provision in the bill. Such a recommendation has not been made for the following reasons:

The policy of the United States is to seek reciprocity by reductions in trade barriers and not by increases in them. One of the principal obstacles to the successful execution of a tariff bargaining program is the tendency on the part of countries with which negotiations may be undertaken to pad their rates for bargaining purposes. Experience has shown that, owing to this tendency, the policy of tariff bargaining has in some cases not only failed to reduce trade barriers but has resulted in an actual increase in them owing to the failure to consummate the expected bargains. In any case if rates are padded for bargaining purposes the result of negotiations tends to be merely the removal of bargaining increments without effecting real reductions in trade barriers. It has therefore seemed inadvisable to frame the pending bill in such a way as to imply an intention to indulge in practices which, if resorted to by other countries, would defeat the object of the proposed legislation.

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A further consideration is that if the proposed legislation proves successful in its operation during the three years in which the authority to conclude agreements may be exercised, the authority may conceivably be renewed for an indefinite period. It is not considered desirable to frame the legislation in such a way as to facilitate increases in trade barriers by future administrations.

You will doubtless have noted that despite the considerations above set forth the provision in the bill to which you have referred seems to contemplate increases in rates as well as decreases. However, your attention is called to the fact that increases can not be effected except pursuant to agreements with foreign countries and the latter are unlikely to consent to increases which have the effect of decreasing the volume of trade. The provision regarding increases in rates takes account of the possibility that in certain circumstances increases in rates might be agreed upon as a part of an arrangement having in view the expansion of trade, as for example when a reduction in the present rate is offered on a specified quantity of imports annually and an increased rate is made applicable to importations in excess of this amount. Such an arrangement would be designed to permit an expansion of trade but to confine such expansion within certain limits.

Very truly yours,

For the Secretary of State:
Sumner Welles
  1. Not printed.