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

No. 97

Sir: The Department desires to clarify the general instructions governing the revision of the Reciprocity Treaty with Cuba (instruction No. 60 of April 3, 1934), in so far as they apply to the binding of rates. Point No. 12 of this instruction suggests in part that “the rates of duty on important specified American products be bound as to maxima by the agreement. It is suggested that rates might be bound on all such important articles except those with respect to which such limitation would clearly be of greater benefit to some foreign country than to the United States.”

The Department has examined all the proposed schedules transmitted by the Embassy with the above instructions in mind. In all cases where bound rates appeared advisable, it has so stated in its instructions. According to Mr. Nufer, Commercial Attaché at Habana, [Page 135] the American technical advisers, however, proceeded on the assumption that in the case of all tariff items concerning which the United States was asking for change in preference, in rate or in both preference and rate, the resulting United States rates were to be bound. Since it is the Department’s intention that the United States rates only in specified items are to be bound, you are requested to reexamine the schedules submitted, in conjunction with the Department’s comments thereon. The Department will, of course, be pleased to give consideration to any suggestions for the binding of rates not specified in its instructions.

The Department would also like to take this opportunity to clarify another point that has arisen with regard to the binding of rates. Apparently the American technical advisers are under the impression that the agreement arrived at with Cuba will bind in each case the “absolute” preference as to minimum, that is to say, that the “dollar spread” between the general rate and the United States rate reached in the new agreement should not be decreased during the life of the agreement. The Department does not believe it advisable to request of Cuba the binding of the “absolute” preference since it is not in a position to make a similar concession to Cuba, which would probably be expected in a reciprocal agreement. The Department believes that only the minimum percentage preference should be determined, which would leave the Government free to raise and lower rates (except where those rates have been expressly bound as to maxima).

Very truly yours,

For the Secretary of State:
Sumner Welles