611.1531/66

The Minister in Honduras (Lay) to the Secretary of State

No. 1359

Sir: In compliance with the Department’s telegram No. 11 of March 6, 3 PM,9 I have the honor to report that today I stated formally to the Minister for Foreign Affairs that my Government requests the inclusion in Schedule I of the proposed Trade Agreement, which was handed to him on February 11, of the following note:

“Products enumerated in this Schedule which are subject to payment of the special municipal taxes created by [Decree] No. 84 of the Honduran Congress published on March 3, 1934, shall on and after the date on which the Trade Agreement becomes effective be exempt from payment of such taxes.”

Before making this statement he confirmed the investigations made by this Legation that the exemption accorded imports from Nicaragua and El Salvador from the effect of these special municipal taxes has not been extended to any country not named in the last paragraph [Page 736]of Article 7 of our General Treaty with Honduras.10 He, furthermore, stated that there are no treaties in force between Honduras and foreign countries other than the Central American States and Panama which contain an unconditional most favored nation clause or which are sufficiently broad in their terms to assure to the merchandise from those countries the same treatment accorded merchandise from Nicaragua and El Salvador. This replies to the Department’s instruction No. 627 of September 29, 1934.11

In addition to making the above request, I pointed out clearly to the Minister the observations contained in the penultimate paragraph of the Department’s telegram and left with the Minister an Aide-Mémoire quoting the text of the note and my statements.

I have thought it advisable to communicate promptly and in this manner to the Foreign Minister the Department’s directions regarding the special municipal taxes while Congress is now discussing Decree No. 84, in case he desires to bring to the attention of the Finance Committee of Congress, who are studying Schedule I, the connection between the proposed Trade Agreement and these municipal taxes.

Respectfully yours,

Julius G. Lay
  1. Not printed.
  2. Treaty of Friendship, Commerce, and Consular Rights signed at Tegucigalpa, December 7, 1927, Foreign Relations, 1927, vol. iii, p. 101.
  3. Ibid., 1934, vol. v. p. 381.