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

No. 637

Sir: I have the honor to report that when I saw the Minister for Foreign Affairs today he brought up the subject of the proposed trade agreement and said that it would be disastrous for Guatemala just now, when it is feeling the full force of the world economic crisis, to sacrifice its customs revenues as proposed in the agreement.

I told him that the negotiations probably would have been expedited if this Government had submitted with its reply to our proposal a statement of the concessions and assurances it might desire to ask of the United States. His reply was to the effect that it had seemed futile to do so in view of the fact that over 99 percent of Guatemalan exports to the United States, of which some 95 percent are bananas and coffee, are free of duty, and of the further fact that the United States appeared to be unable to find a way to open a broader and more favorable market for Guatemalan coffee. He did not appear to attach much importance to binding coffee and bananas on the free list.

He then said that if the United States, through some existing agency or one to be created, could implement an arrangement which would guarantee a market for Guatemala’s coffee at a favorable price, the benefit to Guatemala might compensate for a reasonable sacrifice of revenue by Guatemala. He added that he could think of no other concession which would be of any great benefit to this country.

He told me in the course of our conversation of a proposal the Italian Government has made recently to this Government to take 50,000 quintals of coffee annually in return for tariff concessions on Italian wines and other merchandise exported to Guatemala. I understand from what he told me that this proposal is now being considered here.

I gather from my conversation with the Foreign Minister today, and other conversations I have had since this Government submitted its report on the proposed trade agreement, that while there has been and probably still is a sincere desire here to find a mutually beneficial [Page 591] trade agreement, the present attitude is that Guatemala can gain little or nothing from the agreement if the United States can find no way to help her to market her coffee at a profit.

Respectfully yours,

Matthew E. Hanna