The Chargé in Honduras (Gibson) to the Secretary of State

No. 1415

Sir: I have the honor to refer to the Department’s instruction No. 664 of February 5, 1935, enclosing a list of concessions and assurances which our Government desires to obtain from the Honduran Government in connection with the proposed Trade Agreement.

There are enclosed copies12 of Schedule I, listing under two categories concessions and assurances on certain commodities exported by the United States to Honduras, as accepted by the Honduran Foreign Office, for the Department’s approval.

Attention is called to the memorandum regarding the change in the wording of the third paragraph of the Department’s memorandum, made at the request of the Honduran Minister for Foreign Affairs. It is felt that the change offers the same protection as was [Page 738] requested in the original memorandum. The Minister for Foreign Affairs has agreed to category “C”, but desires to add a clause concerning medicines containing narcotic drugs; this will be forwarded in the near future.

There is also enclosed a memorandum16 of this Mission, giving the statements of the Honduran Foreign Office regarding the articles embodied in the proposed Trade Agreement, as well as the notes of the Mission on the same subjects.

The delay in the conversations concerning the Trade Agreement was due to the opposition of the Minister of Finance, substantiated by the report of the special Honduran Commission named to study the Trade Agreement, to lowering the duties on the majority of the articles in Schedule I. During the conversations held with the Foreign Office it was impressed upon the Honduran Government officials that the Trade Agreement was for the purpose of fostering world trade and that it was felt that the Honduran Government was in favor of such a movement. In the end, the Minister for Foreign Affairs took over the discussions of the Trade Agreement, conferring with the Minister of Finance but not having him enter directly into the conversations.

It is now felt that the Minister of Finance is in favor of the Trade Agreement and will so recommend it to Congress, but certain of his recommendations regarding the Trade Agreement should be respected. He recommended to the Minister for Foreign Affairs that the duty on eggs, lard, flour and butter remain as stated in the Honduran tariff, and that no change from gross kilos to net kilos be accepted with regard to the pharmaceutical preparations.

This Mission feels that there is justice in the refusal to lower duty on eggs, lard, and flour due to the protection needed by the small producers of these articles, and the fact that the flour mills would find it very difficult to compete with the American article. In addition a concession was given a new flour mill in the last Congress, and the question of duty on flour is one of great interest to the Honduran Congressmen.

It must be appreciated that the proposed Trade Agreement is of political value to the Honduran Congress, and due to the division in the Nationalist Party, it would be used as a means of attack by one division against the other, to such an extent that the passage of a Trade Agreement would cause a great deal of possible bitter comment on the part of the Honduran public.

With the dropping of the articles, eggs, lard, flour, confectionery, common soap and the agreement with regard to duty being collected [Page 739] on gross kilos, rather than net kilos on pharmaceutical preparations, it is felt that there are no articles than can be used for the purpose of political arguments.

It is also the honest conviction of this Mission that the Honduran Government offers justified arguments in refusing the lowering of duties on the above articles. Detailed explanations are given in the notes of the Memorandum attached to this despatch. It is felt that Schedule I could be accepted in its entirety.

Respectfully yours,

Raleigh A. Gibson
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