611.1431/108a
The Secretary of State to the Minister in Guatemala (Hanna)
Sir: The receipt is acknowledged of your despatch No. 618 of April 30, 1935,11 and its enclosures, which constitute Guatemala’s reply to your memorandum transmitting requests from this Government for concessions from Guatemala to be included in the proposed trade agreement with that Government. The reply of Guatemala will receive the careful attention of this Government and detailed comments thereon will be transmitted to you at an early date. Meanwhile, the Department wishes to set forth a number of considerations which you should find an opportunity to present orally to President Ubico and the Minister of Foreign Affairs and possibly to other officials of the Guatemalan Government concerned.
Guatemala is apprehensive lest by granting the concessions requested it reduce its customs revenues below a point where it can meet its budgetary needs. You should explain to the Guatemalan officials that it is not the desire of the United States that any government with which it may negotiate should grant concessions calculated to deprive that Government of needed revenues. In this connection, however, it should be borne in mind that the trade agreements program is aimed, through reciprocal lowering of tariff barriers, at an increase in total world trade, and it is confidently expected, therefore, that individual reductions in duties on properly selected commodities will not result in reduced revenues. On the contrary, it is believed that in many cases a positive increase in revenues will result. In drawing up its list of concessions to be asked, this Government had constantly in mind the desirability of selecting those articles the market for which was capable of expansion in such manner that total revenues from their importation would probably not be diminished. Consequently, while this Government will be pleased to reconsider its specific requests from the point of view of the revenues of Guatemala, it hopes that the Guatemalan Government, when an endeavor is made to conciliate [Page 592] the points of view with reference to the items included in Schedule I, will bear in mind the possibility that increased imports will compensate for whatever reductions in duties may be granted.
As already noted, the trade agreements program, to the principles of which Guatemala subscribed at the last Pan American Conference, in Montevideo, has as its object an increase in total world trade. In line with this objective the United States is not asking exclusive concessions of any government, as the Guatemalan Government appears to believe, but prefers that any reductions in duties conceded to it be generalized to all other countries.
It is noted that Guatemala does not consider that it can obtain from the trade agreement any advantages which would compensate it for the concessions which this Government desires.
When it is recalled that Guatemala’s principal export products, coffee, bananas and unprocessed chicle, already enter the United States free of duty, it is obvious that this Government is not in a position to grant Guatemala further concessions of importance in the form of reductions in customs duties.
This does not mean, however, that Guatemala cannot expect to derive advantage from the trade agreement. The willingness of this Government to guarantee that bananas, coffee and chicle will be maintained on the free list as far as Guatemala is concerned, during the life of the agreement, is a commitment of real value to Guatemala and to its exporters, to whom few free markets for their products remain. The possibility that the United States Congress may remove the products in which Guatemala is interested from the free list is by no means as remote as it is apparently considered to be in Guatemala.
More important than any immediate advantage to be derived out of the trade agreement, however, are the advantages which Guatemala will derive from the success of the trade agreements program in general. This Government is convinced that if the other countries of the world will cooperate with the United States in making the trade agreements program a success, Guatemala will ultimately obtain advantages much broader and of far greater importance to its vital economic interests than it could obtain from any reduction this Government might grant in customs duties, were such duties in fact being applied on its principal products.
Guatemala is well aware of the growing tendency on the part of nations throughout the world to interfere with normal trade by creating arbitrary hindrances and barriers. Guatemala’s coffee trade has already been affected adversely by obstructive measures of the character suggested, placed in effect by certain European countries, formerly important markets. It is apparent that unless the tendency referred to is reversed, still further obstacles to trade may be placed, [Page 593] not only by those European countries but by other countries as well, and Guatemala will be exposed to further injury and possibly complete loss of other profitable markets.
In the United States today, not only do Guatemala’s principal export products enter free of duty, but they are not subjected to exchange restrictions, quotas, or other arbitrary hindrances to their free sale. In fact, the United States is the only large market in the world in which Guatemala’s principal products are allowed to enter free of duty and without restriction. It is the purpose of this Government to insure, through its trade agreements program, that this market will remain open to Guatemala and it is hoped, with progress on the trade agreements program, that other markets now closed to Guatemala will be gradually reopened. This Government, therefore, considers that if it is successful in its program, and it has every reason to believe that it will be, since support from other governments has already been forthcoming in generous measure, it will have secured for Guatemala advantages of greater importance than the advantages which this Government expects to derive out of whatever immediate concessions Guatemala may agree to accord it.
In summary, this Government is endeavoring, through its trade agreements program, to remove artificial hindrances which constitute such a serious threat to trade throughout the world. It is evident that Guatemala, because of the vital importance to it of its export trade, is deeply concerned in the success of this program. With this in mind, and having in mind also the possible further injury to Guatemala’s trade, and to its entire national economy should the tendency to erect barriers to the free exchange of goods be allowed to continue, and especially should the United States, in self-defense, be forced to erect similar barriers, this Government is confident that Guatemala will be anxious to cooperate to the extent it is possible for it to do so in insuring the success of the trade agreements program by making the concessions it reasonably can, in connection with the proposed trade agreement.
With reference to the impression that officials of the Guatemalan Government appear to have that the United States is requesting Guatemala to forego its requirements for certificates attesting the purity of foods, drugs, et cetera, it should be made clear that the United States is requesting only that Guatemala not require the furnishing of certificates of an agency of the Federal Government when no Federal agency is authorized by law to issue such certificates, without prejudice, of course, to Guatemala’s right to demand the presentation of such other evidence as it at present requires or that exporters of the United States are in a position to furnish.
Very truly yours,
- Not printed; the despatch stated that: “The principal objection of the Minister of Hacienda appears to be that the proposed reductions in tariff rates on importations to Guatemala from the United States would result in a 30% reduction in Guatemala’s customs revenues ‘without any compensating advantage for Guatemala being stipulated in the Project.’” (611.1431/102)↩