The Secretary of State to the Minister in Nicaragua ( Lane )

No. 122

Sir: The Department has received your despatch No. 354 of July 23, 1934, concerning the proposed reciprocal trade agreement between the United States and Nicaragua.

The act approved June 12, 1934, provides that “No proclamation shall be made increasing or decreasing by more than 50 per centum any existing rate of duty or transferring any article between the dutiable and free lists”. The Legation is correct, therefore, in assuming that this act precludes the imposition of duties on coffee and bananas by executive action. However, in the absence of an obligation to Nicaragua to retain products originating in that country on the free list, there is nothing to prevent the Congress from imposing duties upon them if it so desires. The value of a provision continuing specified articles on the free list would be that, during the effective period of the agreement, Nicaragua would be protected against the possible imposition of duties on such articles.

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With reference to enclosure No. 1 of your despatch referred to, the reductions in duties which the United States might agree to make in an agreement with Nicaragua would apply equally to all countries, except Cuba, with which the United States has a special treaty relationship under which the percentage of preference accorded to Cuban products must be maintained. The United States would perceive no objection, therefore, if concessions by Nicaragua to the United States should be generalized to other countries in conformity with Nicaragua’s most-favored-nation treaties or its general commercial policy. Such general reductions would be quite consonant with the policy of the United States, which is to seek an increase in the total volume of international trade rather than the diversion of trade from one channel to another.

Consideration is being given, also, to the other matters contained in your despatch.

Very truly yours,

For the Secretary of State:
Sumner Welles