The Secretary of State to the Ambassador in Cuba ( Caffery )
Sir: In connection with the general instruction of this date setting forth the general principles to be followed in negotiation of a commercial treaty between this country and Cuba, the Department wishes to transmit one supplementary element. This is in connection with the general principle numbered (1) “The Department considers that the general rule should be to seek no increases of rates of duty on importations from foreign countries”.
The above-stated principle is one which the Department wishes strictly to follow in all ordinary circumstances and conditions, and it represents the position which the Department has assumed in regard to trade agreements entered into between third countries. However, a condition extraordinary in some respects is presented by the recent trend of Japanese competition, which it is presumed has also manifested itself in the Cuban market. This Japanese competition is made the more intense and difficult by virtue of the great decline in the value of the Japanese currency; there exists a possibility that within the treaty period this decline may proceed further, thereby accentuating the difficulties of competition and leading to the offer of Japanese goods in the Cuban markets at prices even more markedly low than those at which some Japanese goods are already being offered.
This is a contingency which the Department feels should be guarded against in the drafting of the treaty with Cuba. It would be unfortunate if after a lapse of time it should result that American trade advantages secured in Cuba in return for the advantages given Cuba (in the field of sugar only as the result of a very considerable effort) did not develop as expected because of unusual Japanese competition.[Page 125]
It is therefore suggested that the Embassy make a careful study of the different branches of Cuban trade in which it appears that Japanese sales effort and competition in the Cuban market has grown markedly greater during the past two years, and report back to the Department as regards those items with recommendations. It may be that in regard to some of the items in question it will be found advisable to depart from the general principle laid down above.
Very truly yours,