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

No. 93

Sir: With reference to Instruction No. 10 of January 4, 1934, in reply to my telegram No. 36 of December 18, 3 p.m. (1933), concerning the desire of the Costa Rican Government to negotiate a new commercial treaty with the United States, I have the honor to report:—

On yesterday I discussed this matter further at a conference jointly with President Ricardo Jimenez and Foreign Minister Leonidas Pacheco in the office of the President. I explained to both officials that while the United States was willing to give sympathetic consideration to their suggestion for a new treaty, that in view of the fact that the exportation of Costa Rican coffee and bananas to the United States furnishes such a tremendous factor in the total of Costa Rican foreign trade, that the United States sought concessions with reference to American products imported by this country.

I pointed out also that the United States would desire that the proposed treaty contain a provision for unconditional and unrestricted most favored nation treatment; likewise provision against quantitative restriction 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 in respect to internal taxes on all products.

In the absence of specific instructions from the State Department, I was unable, at their request, to say definitely upon what American products my Government would desire concessions, but I called their attention to the situation now prevailing with reference to the importation of American food products, particularly flour, fats and canned groceries. These are not luxury articles and neither are they competitive with Costa Rican products.

The majority of such foodstuffs imported by Costa Rica come from the United States, but the duties are so high that the prices are almost prohibitive, particularly with reference to vegetable and meat fats and canned foodstuffs.

In connection with the duty on canned foodstuffs, I called the President’s attention to a personal observation I made during the present week. On the 9th of January, I received from the United States Navy Commissary Store at the Canal Zone, three small cases of canned foodstuffs which cost $12.50. As the Department is aware, diplomatic officers in Costa Rica are permitted to receive their personal shipments without payment of duty. It is a custom, however, to return with the bill of lading a cancelled customs receipt. Attached to the bill of [Page 89] lading for these $12.50 of groceries was a customs receipt for ¢159.80. At the current rate of exchange of 04.50 to $1, this is a duty of $35.50 on the $12.50 shipment.

The President and Foreign Minister Pacheco agreed with me that this duty is so high that the purchase of American canned goods imported into Costa Rica is beyond the means of the ordinary consumer. They also agreed that such an excessive tariff on non-competitive articles defeated the fundamental purpose of the tax because it restricted consumption.

In my conversations I also suggested that perhaps the United States Government might desire certain concessions on textiles which are imported in large quantities from the United States.

The President and the Foreign Minister both expressed a willingness to grant the United States reciprocal advantages in return for the continued assurance of a free of duty market for Costa Rican coffee and bananas. The Costa Rican Government, I should add, is extremely desirous of a perpetuation of this satisfactory arrangement from their standpoint, not only because of the immediate market possibilities but also because there prevails in this country a general desire to greatly increase markets in the United States for Costa Rican coffee, and it is the belief of Government officials that if and when the proposed Inter-American Highway is completed, large undeveloped areas will be made available for coffee which, it is hoped, can be sold in the markets of the United States.

At the moment, neither official was in a position to suggest whether they desired additional tariff favors from the United States, but I was told that the matter would be discussed with Finance Minister Brenes and if there was anything else that he was interested in aside from equal courtesies with other nations on the importation of Costa Rican manufactured liquors, I would be so notified.

For the information of the Department, I am attaching herewith memoranda prepared for me, at my request, by Vice Consul Livingston Satterthwaite,8 in charge of the American Consulate in San José, with reference to duties on principal American imports. There are on file in the Department at present, detailed reports from the Consulate showing dollar values of American imports by Costa Rica which will be helpful to the Department in preparing, for my guidance, a statement “regarding the concessions which would probably be requested by the United States”.

If the State Department desires that I carry on with these conversations with a view of actual conclusion of a treaty, may I repeat my request in my telegram of December 18, 1933, that I be supplied with such textual data as the Department wishes incorporated in the treaty.

Respectfully yours,

Leo R. Sack
  1. Not printed.