611.1431/129

The Chargé in Guatemala (O’Donoghue) to the Secretary of State

No. 754

Sir: I have the honor to refer to my telegram No. 42 of September 5, 5 p.m. informing the Department of the reply of the Minister of Hacienda with regard to the memorandum which I submitted for his consideration on August 23, 1935, and which was based on the Department’s telegrams No. 24 of August 22, 6 p.m. and 25 of August 22, 7 p.m.

I now have the honor to transmit herewith a copy of my memorandum and a copy and translation of the Minister’s memorandum of September 5, together with the enclosures thereto:17

1.
Principal stipulations concerning the concessions which the Government of Guatemala will grant to the United States and
2.
Principal compensatory conditions requested by the Government of Guatemala.

There is also attached without translation a copy of List No. 116 giving the items on which Guatemala is prepared to grant tariff concessions.

It will be noted that this list is the same as List No. 116 transmitted with despatch No. 729 of August 10, with the exception that this Government has granted two further tariff concessions, namely 211–4–40–03 “sardines prepared in oil or sauce” and 211–4–04–04 “unspecified fish and oysters prepared or preserved in oil, in sauce or in their own liquid, crude, cooked or pickled”. Guatemala is prepared to reduce the duty on these two items from thirty cents per gross kilo to fifteen cents per gross kilo.

[Page 610]

There is also transmitted a copy without translation of List No. 318 (there is no list No. 2) showing those items the rates of duty on which the Government of Guatemala is prepared to bind for the life of the agreement. This list is identical with that submitted with despatch No. 729 excepting only the two items just mentioned which were removed therefrom and placed on List No. 1.

In his memorandum the Minister of Hacienda has set forth the reasons why Guatemala is unable to grant any further concessions which would affect the national income. The reasons given are practically the same as those advanced by him with his letter of April 24, 1935,18 which accompanied despatch No. 621 of May 2 and I need not therefore elaborate upon them here.

It will also be observed that the Government of Guatemala is desirous of adding raw chicle to the list of those items which the United States is prepared to bind for the life of the agreement. At the time of our conversation with the Minister of Hacienda, Consul General Marsh and I told him that we doubted if it would be possible for this to be done inasmuch as Guatemala is not the principal producer of this commodity and that the Government of the United States would doubtless not bind it at the present time in view of its possible bargaining power in connection with the conclusion of trade agreements with other countries which might be principal producers of chicle. The Minister appeared to recognize the soundness of this fact and indicated that he would be prepared to waive this point.

In our conversations with the Minister of Hacienda we amplified my original memorandum but did not suggest the possibility of releasing the bindings offered on piece goods and cotton yarns because, to our mind, there was no advantage to be gained thereby. Neither did we suggest the release of the tariff items mentioned in paragraph one of the Department’s telegram No. 25 of August 22 or the bindings on 493–2–03–03 and the following numeral, preferring to await further instructions from the Department in this respect.

In connection with the immediate foregoing it is worthy of note that the Government of Guatemala has just denounced its commercial treaties with the Governments of Great Britain, Germany and Italy. (The Minister of Hacienda remarked that the United States would be the only country with which Guatemala would have a commercial agreement.) It is generally rumored here, that when the treaties in question cease to be in force the local authorities will increase the rates of duty on certain of the products coming from those countries and the territories to which the treaties may have been applicable. This is said to be particularly true with regard to Germany and Great Britain. For this reason it was thought that the Department might prefer the binding of the items which it had suggested might be released [Page 611] even though it considers the present duties excessive. However, should the Department desire that they be removed from Schedule I there is no doubt that this can be done.

When the Minister of Hacienda handed us his memorandum accepting the general provisions of the agreement I inquired if he had in mind the revised draft which had been received with the Department’s instruction No. 221 of August 24, and which I had submitted to the Minister. He replied in the affirmative.

Consul General Marsh and I feel that the Government of Guatemala has granted all of the concessions which it will consider at the present time in view of the, to them, apparent lack of any direct compensating advantages.

Respectfully yours,

Sidney E. O’Donoghue
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