The Department of State to the Colombian Embassy 11
The memorandum of the Department of State dated August 28, 1934,12 indicated that the Government of the United States desired to conclude a new trade agreement with the Republic of Colombia, under the authority of the Trade Agreements Act approved by the President on June 12, 1934, to replace the Agreement signed December 15, 1933. It was explained in the memorandum under reference that the [Page 73] Act of June 12, 1934, authorizes the President to enter into trade agreements with foreign countries and to make them effective by proclamation without the necessity of obtaining a special act of Congress in each case, and requires, among other things, that the intention to negotiate any such agreement must be publicly announced in order that interested persons may have an opportunity to present their views.
These requirements having been complied with, in connection with the proposed new trade agreement with the Republic of Colombia, the Government of the United States is now in a position to proceed with the negotiation of an agreement based upon the provisions of the Agreement signed December 15, 1933, and to indicate the changes in the latter instrument which it suggests be incorporated in the proposed new agreement.
With reference to the text of the Agreement signed December 15, 1933, it is necessary to propose a number of changes. There is attached the text of the proposed new agreement as it would appear if the suggested changes were made. For convenience, there is also attached a comparative text of the Agreement signed December 15, 1933, showing proposed omissions and additions.13 The changes indicated are in large part only formal and will doubtless in most cases be found to be self-explanatory. However, certain of them seem to require some explanation and comment.
Article III of the Agreement signed December 15, 1933, provided in effect that the provisions regarding the customs treatment to be accorded by each country to the products of the other should not apply to such special duties as are, or may be required to be, imposed by the laws of either country on importations which are not properly marked to indicate their origin, or to anti-dumping duties. With respect to the latter stipulation, however, the article contained an exception to the effect that anti-dumping duties would not be applied to unroasted coffee imported into the United States from Colombia.
When the Agreement of December 15, 1933, was signed, it was the intention to submit it to the Congress of the United States to be enacted into law. Under this procedure the effect of Article III, if approval of the Agreement by the Congress had been obtained, would have been to modify the Anti-dumping Act by statutory enactment. The situation, however, has been altered by the fact that the proposed new agreement will be brought into force on the part of the United States by Executive action, under the authority of the Trade Agreements Act of June 12, 1934. It becomes necessary, therefore, to make certain that the provisions of the proposed agreement come clearly within the authority of that Act. The exception above referred to regarding the non-application of the Anti-dumping Act to coffee imported from [Page 74] Colombia has been carefully considered by the competent legal officers of this Government, and they have expressed grave doubt whether the Trade Agreements Act authorizes the inclusion of this provision in the proposed agreement. For this reason it is considered necessary to propose that it be omitted. It may be pointed out, however, that in the thirteen years during which the Anti-dumping Act has been in effect there has been no occasion for the application of that Act to green coffee imported from Colombia.
The Government of the United States also desires further that the whole of Article III of the Agreement signed December 15, 1933, be omitted from the new agreement and that the other matters dealt with in that article be provided for in general terms in Articles I and II, as indicated in the attached draft of the new agreement. It is believed that the provisions in Article III of the Agreement signed December 15, 1933, regarding additional duties on articles not marked to indicate the country of origin and regarding anti-dumping duties are adequately dealt with in the general clause proposed for inclusion in Articles I and II, whereby the duty reductions on products specified in the Schedules are confined to ordinary customs duties, and whereby such products are exempted from any other duties, taxes, fees or charges other or higher “than those imposed or required to be imposed by laws … in effect on the date of the signature” of the Agreement.
With reference to Article IV of the Agreement of December 15, 1933, relating to internal taxes, the changes suggested are based on considerations similar to those with respect to the non-application of anti-dumping duties to green coffee imported from Colombia. As in the latter case, there is grave doubt whether the Trade Agreements Act of June 12, 1934, authorizes the inclusion of any provision with regard to the limitation of the amount of state or municipal taxes. For this reason it is necessary to propose that the provisions of the third paragraph of Article IV, whereby such a limitation is imposed, be omitted from the new agreement. It will be observed that in the proposed revision of the text the corresponding obligation on the part of the Republic of Colombia with respect to departmental and municipal taxes has been omitted.
On the other hand, a further study of the legal considerations involved has led to the conclusion that it would be possible, in conformity with constitutional provisions, to include in the proposed new agreement a provision for national and most-favored-nation treatment with respect to state and municipal taxes. The provisions of the second paragraph of the proposed revised text of Article IV have been modified in accordance with the above considerations. The Government of the United States requests that, reciprocally, the provision for national and most-favored-nation treatment in Colombia regarding departmental and municipal taxes likewise be revised so as to be [Page 75] made applicable to all articles enumerated and described in Schedule I. This would, of course, involve the omission of Schedule III of the Agreement signed December 15, 1933.
Article IV as thus revised would provide (a) for national and most-favored-nation treatment with respect to national or federal internal taxes on all articles, whether or not included in the appended Schedules; (a) a limitation on the absolute amount of national or federal internal taxes on articles enumerated and described in the Schedules; and (c) reciprocal national and most-favored-nation treatment with respect to state or departmental, and municipal taxes on all articles enumerated and described in the Schedules.
With reference to the tariff concessions set forth in Schedule II of the Agreement signed December 15, 1933, the Government of the United States is prepared to add the following articles to the list of products on which customs concessions would be granted by the United States to Colombia:
- Paragraph 10 (Tariff Act of 193014)—Tolu balsam, natural and uncompounded, not containing alcohol; present duty 10% ad valorem; proposed new duty, 5% ad valorem.
- Paragraph 35 (Tariff Act of 1930)—ipecac, natural and uncompounded, but advanced in value or condition by any process or treatment whatever beyond that essential to proper packing and the prevention of decay or deterioration pending manufacture, and not containing alcohol; present duty 10% ad valorem; proposed new duty. 5% ad valorem.
- Paragraph 762 (Tariff Act of 1930)—castor deems; present duty one-half of 1 cent per pound; proposed new duty, one-fourth of 1 cent per pound.
With reference to the proposed tariff concessions by Colombia on products of the United States included in Schedule I of the Agreement signed December 15, 1933, the Government of the United States invites attention to the fact that certain of the rates of duty in the Colombian tariff, particularly those on agricultural products, are extremely high and would remain so even if they were reduced as provided for in Schedule I of the Agreement signed December 15, 1933. Therefore, the Government of the United States would appreciate such consideration as the Government of the Republic of Colombia may be disposed to give to the possibility of granting some further reductions in such duties.
With reference to the matter of foreign exchange control, the Government of the United States proposes that there be included in a separate exchange of notes, to be entered into concurrently with the proposed trade agreement, provisions on this subject designed reciprocally to protect the interests of the two countries.