The Minister in Honduras (Lay) to the Secretary of State
[Received August 29.]
Sir: Referring to Department’s instruction No. 5926 and subsequent correspondence I have the honor to enclose herewith copy and translation of a note dated August 22, 1934, from the Honduran Foreign Office,7 expressing the hope that “at your convenience there will be transmitted for submission to study those concessions which your Government will request and, if in agreement, to begin conversations directed toward the termination proposed in your note referred to above.”
When I saw Doctor Lozano, the Finance Minister, yesterday, he expressed doubt that concessions to American products in the form of reduced duties would materially increase their sale here and stated that Honduras had reached for the present the limit of its purchasing power for foreign products. He seems inclined to favor securing from the next Congress authority for the Executive to impose a supertax on products from countries that import only small amounts of or no Honduran bananas. I did not discuss this phase of the question with him but later the Department may deem it advisable to consider accepting concessions in this or some other form in lieu of reductions in duties on specific products or general reductions to all countries.
This Legation believes that the market for Honduran products in the United States could be slightly increased by better marketing organization but not by reduced duties.
It should be borne in mind that any general concessions by Honduras on the products from all countries will not prevent Japan from displacing us in the valuable cotton goods market in this country, which has been worth to American manufacturers on the average during the past three years about $800,000 a year. I understand that Central America purchased before we were replaced by Japan about 20% of our total of exports in cotton goods, and that Honduras imported as much and higher grades as any one of these republics. A copy of a report on this subject dated August 23, 1934, from the Vice Consul at Tegucigalpa, is enclosed herewith.7 Any small increases [Page 377]in our trade with Honduras that we might effect by a general reduction in duties would not offset the loss now sustained by the competition from Japan.
I shall be in Washington on leave about the middle of next month and will be available to discuss this subject with a member of the “Committee on Foreign Trade Agreements” if so desired.