The Department of State to the Nicaraguan Legation
Reference is made to Señor De Bayle’s note of September 16, 1933, expressing the interest of the Nicaraguan Government in exploratory conversations regarding the possibility of concluding a trade agreement between the United States and Nicaragua, and to Mr. Caffery’s reply of October 5, 1933, in which it was stated that if present studies and conversations should indicate the practicability of this Government’s entering into a series of reciprocity agreements, it will be happy to initiate conversations on this subject with the Government of Nicaragua.
The studies and conversations above referred to have now progressed to such an extent as to make it possible to initiate exploratory conversations with the Government of Nicaragua regarding the possibility of concluding a reciprocal trade agreement. Preliminary studies suggest that such discussions might proceed on the following basis:[Page 497]
Over 70% of the imports into the United States from Nicaragua consist of bananas and coffee. These products are now permitted to be imported free of duty. The United States might on its part, therefore, undertake in the proposed agreement to continue to admit these products free of duty in return for concessions by Nicaragua on products imported from the United States.
Although, as indicated above, bananas and coffee are by far the most important articles exported from Nicaragua to the United States, there may be other products on which the Government of Nicaragua would seek concessions and which it would desire to bring to the attention of the United States Government in the course of the exploratory conversations. However, with reference to the interest of the Government of Nicaragua in the treatment to be accorded Nicaraguan cane sugar, it is necessary to state that it would not be possible at this time to indicate whether any provision could be made in the proposed trade agreement regarding the treatment to be accorded this product.
In addition to provisions of the character indicated above, the trade agreement might provide for unconditional and unrestricted most favored nation treatment, subject to the usual exception regarding preferences by the United States to the commerce of Cuba, and to other generally recognized exceptions; provision against quantitative restrictions (quotas) on imports of products respecting which tariff concessions are granted by each party under the agreement; provision against increased internal taxes on such products; and national treatment with respect to internal taxes on all products.
The Minister of the United States at Managua is being instructed in the above sense and is being requested to proceed with exploratory conversations along the lines indicated if the Government of Nicaragua is so disposed.