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

No. [214?]

Sir: Reference is made to your air mail despatch No. 252 of April 14, 1934,43 transmitting a memorandum on the subject of Japanese and Belgian competition in Cuba,44 and suggesting that in certain cases requests for increased general rates in the Cuban tariff be made in connection with the revision of the reciprocity treaty with Cuba.

The policy of this Government is to bring about a reduction in trade barriers which will result in an increase in the volume of international trade. This policy, which was enunciated by this Government both at the London Economic Conference45 and the Inter-American Conference at Montevideo,46 presupposes an effort to increase international trade, not merely to divert it from one channel to another. The Department cannot, therefore, consistently with this policy, authorize the inclusion in the agreement with Cuba of any provision under which Cuba would be bound to maintain rates of duty on imports from third countries which are higher than the rates now in effect. The most that can be done is to authorize that certain rates in excess of those now applicable be bound as to maxima, and that the percentual margins of preference be increased. If, as is contemplated, the general rates thus derived are embodied in the Cuban tariff law, the immediate effect will be an increase in the present general rates and an increase in the absolute margin of preference, in consequence of which the competitive position of American producers would be materially improved at least for a time. There would, however, be no obligation on the part of Cuba to maintain these increased rates. Cuba would be free at any time to reduce them in consequence of negotiations with third countries, or autonomously.

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Such a compromise between the important general policy above set forth and the exigencies of the situation now facing certain of our producers with respect to competition in the Cuban market, seems to the Department to meet the necessities of the situation. On the one hand it is likely to result in the strengthening of the competitive position of American producers at a time when unsettled currency conditions and other abnormal trade conditions are resulting in a loss of trade to their foreign competitors. On the other hand, these measures are not such as to expose this Government to the charge that it disregards in practice the principles to which it professes to adhere. There is nothing in the proposals herein authorized which would estop this Government from objecting to provisions which have been included in agreements between certain foreign governments whereby rates of duty on imports from the United States and other third countries cannot be reduced by negotiations or otherwise as long as those agreements remain in force.

Accordingly, you are authorized to propose the binding as to maxima of certain increased rates on importations from the United States and to propose certain increases in the minimum percentual preferences, as indicated below.

[Here follow suggestions as to rates on cotton and rayon yarn, incandescent bulbs, wire sheathed with pipe and insulating coverings, lamp cord, cellophane, iron bars, iron plates, and iron shapes.]

Decision has been reached on the foregoing cases, after full study of the data submitted by the American technical advisers, and of that in the possession of this Government. In some instances, full information is lacking. The Department will be pleased to reconsider its decisions in any case, upon the submission of more complete data.

Very truly yours,

For the Secretary of State:
Sumner Welles