The Minister in Guatemala (Hanna) to the Secretary of State

No. 621

Sir: Supplementing my despatch No. 618 of April 30, 1935,8 I have the honor to transmit herewith a copy and translation of a communication8 concerning the proposed trade agreement addressed by the Minister of Hacienda and Public Credit on April 24, 1935, to the Minister of Foreign Affairs, and a copy and translation of the enclosures thereto consisting of a report8 from the office of the Director General of Public Health, dated April 6, 1935, and a communication dated March 19, 1935,8 addressed to the Ministry of Hacienda by the Director General of Customs transmitting the report of the Committee to which the proposed trade agreement had been referred for study, together with copies and translations of the enclosures8 to the latter report, excepting tables Nos. 1 and 2 and communication No. 142 from the Section of Provisions which have not yet been received from the Ministry of Foreign Affairs. The copies and translations were prepared in the office of the Consulate General.

As the enclosed documents will doubtless be subjected to a searching examination and analysis by the Department’s appropriate committees, I will not submit a detailed study thereof. I will merely point out a few of the opinions expressed in the documents by way of indicating the unfavorable attitude of the authorities here who have studied the Project.

The Minister of Hacienda, in his letter of April 24 forwarding the various documents in reference, stated that “to accept the Project as it is submitted would impair the public services …9 without any [Page 589] compensating advantages for Guatemala being embodied in the Project”. He states further that “the benefits that the United States would obtain by signing the agreement would be insignificant if they are compared with the enormous volume of its foreign commerce and development of its economic potentiality, while for Guatemala, which is a country with few resources and rather poor agricultural economy, the losses would be decidedly onerous”.

The Committee to which the Project was referred for study pointed out in its enclosed report dated March 19, 1935, as one of its principal objections, that the annual reductions in the fiscal revenues if the agreement were accepted would be a minimum of Q316,373.59, and that probable increases in the importations from the United States in the same ratio that they would decrease from other countries might increase this amount to a maximum of Q410,952.32, which might be still further increased if the general importation of articles covered by the agreement should increase during the period of three years it would be in force.

The Committee pointed out in the same report as a further serious objection that “the rates which it is suggested to lower are at the present time the support of our principal industries, such as the manufacture of crude and colored cotton goods, the production of wheat and flour, the manufacture of cotton shirts and of socks and stockings of natural silk, as well as the preparation of ham, bacon, sausage, and casings in general …10 We believe that it is not exaggerated to think that the reduction of such rates would be fatal to our industrialists and manufacturers, who probably would have to close their factories thereby leaving a considerable number of workers without work and permitting the selling price of the products to increase for lack of competition”.

In forwarding the Committee’s report, the Director General of Customs stated in his enclosed communication of March 19, 1935, that he could “but indorse in each and every point the information given, especially as it is not necessary to be an authority on the subject to understand how serious it would be for the country to accept such a proposed agreement”.

It is to be noted particularly that, with the exception of one item, the Committee has rejected for reasons which are stated in its report all the reductions proposed in the agreement. The excepted item is impure cotton-seed oil concerning which there was no importation to Guatemala in the year 1934.

It is noted also that the Committee declined to concur in any of the proposals to bind existing tariff rates.

[Page 590]

With respect to compensating concessions that the Government of the United States might grant to Guatemala, the Committee stated that it refrained from presenting a study or submitting a proposal with regard thereto because it considered that “in the condition in which the proposed agreement has been presented it will not be accepted by our Government”.

Respectfully yours,

Matthew E. Hanna
  1. Not printed.
  2. Not printed.
  3. Not printed.
  4. Not printed.
  5. Not printed.
  6. Omission indicated in the original despatch.
  7. Omission indicated in the original despatch.