The Acting Secretary of State to the Minister in Costa Rica (Sack)

No. 10

Sir: Reference is made to your telegram No. 36, December 18, 3:00 p.m., regarding the desire of the Costa Rican Government to negotiate a new commercial treaty with the United States.

Before negotiations are undertaken the basis of the proposed trade agreement should be further explored. You should therefore take up the matter informally with the Foreign Minister and ascertain more specifically the character of the agreement which he has in mind. Over eighty percent of Costa Rica’s exports to the United States consist of coffee and bananas. In the proposed agreement, therefore, the United States might undertake that these products should continue to be admitted free of duty in return for reductions in duties by Costa Rica on important products of the United States. It is possible that in the course of the exploratory conversations Costa Rica may wish to bring to the attention of the United States other products in addition to bananas, and coffee, on which concessions would be desired. While sympathetic consideration would be given to any such proposals, it is believed that in view of the importance of coffee and bananas in Costa Rica’s trade with the United States a guaranty of continued free entry of these products would be equivalent in value to concessions by Costa Rica on the principal products imported from the United States.

The trade agreement might also contain a provision for unconditional and unrestricted most favored nation treatment, subject to the usual exception regarding Cuba, and 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.

If the Foreign Minister is prepared to begin exploratory conversations along the lines above indicated, the Department will send you as soon as possible a statement regarding the concessions which would probably be requested by the United States.

You should make it clear that the intention of this Government is solely to explore the situation with a view to determining whether negotiations if undertaken would be likely to meet with success.

Very truly yours,

For the Acting Secretary of State:
Francis B. Sayre