The Secretary of State to the Minister in Honduras (Keena)
Sir: With reference to the Department’s telegram No. 33, of August 2, 1935, I am transmitting herewith a tentative final draft25 of the proposed trade agreement with Honduras, consisting of General Provisions, Schedule I and Schedule II.
The Department hopes that Article I in its present form will be agreeable to Honduras. You will note that mention of public service charges and ships’ dues has been omitted. The Department believes that this omission should be acceptable to Honduras if it understands thoroughly the exact purport of Article I, which is to insure that tariff concessions provided in Schedule I will not be nullified by increases in governmental charges other than customs duties. The article does not provide for the abolition of such special charges but only that such existing charges shall not be increased. It affects only products named in the schedule.
Article I does not apply to charges on ships, as distinguished from their cargoes, and hence there would be nothing in the trade agreement or in the existing treaty which would limit the amount of the charges imposed on ships. The only requirement in the treaty is that such charges must not be discriminatory.
You will observe that a paragraph has been added to Article I, following substantially the wording proposed by Honduras, specifically exempting soaps and butter from the effect of the taxes provided for by Decree No. 84. It is not essential that reference be made to the ordinary municipal taxes in view of the statement contained in section two of your telegram No. 36, July 22, 6 p.m.,25 to the effect that they are true internal taxes affecting both domestic and imported products alike. However, since it is believed that they are accordingly covered by Article III of the General Provisions whereby each country agrees to accord national treatment to the products of the other in respect [Page 747]of internal taxes, appropriate reference has been made, for purposes of clarity, to that article in the enclosed revised text of Article I.
Two paragraphs have been added to Article XII in order to meet the Foreign Minister’s objections on the subject of sanitary laws and regulations as reported in section four of your telegram No. 36, July 22, 6 p.m. These paragraphs form part of Article X of the trade agreement between the United States and Brazil and the Department believes that they will satisfactorily answer the Foreign Minister’s objections.
The final article of the General Provisions, numbered XVI, has been redrafted in an endeavor to meet the Honduran position regarding withdrawal of concessions which may result in serious loss of customs revenue. You will observe that Article XVI stipulates that the Agreement will have a life of one year and that it may be denounced thereafter on six months’ notice. This should give Honduras the safeguard which it appears to believe necessary, and at the same time eliminates mention of loss of revenue. It would permit Honduras to propose changes at the end of one year and if such changes should not be agreed to by the United States, the agreement could be terminated on six months’ notice.
Schedule I has been rearranged without regard to categories (a), (b) and (c). The concessions are now arranged numerically, with both bound items and reductions in duty figuring in the same list and with the note on pharmaceuticals quoted in your telegram No. 32, of July 16, 5 p.m.,26 included after the concessions on patent medicines. The wording of this note has been altered merely to permit mention by name of the three conventions of Geneva and The Hague concerning the manufacture and traffic in narcotic drugs.
The attached draft of Schedule II is substantially as transmitted to you under cover of the Department’s instruction No. 703 of June 15, 1935. One difference which you may explain to the Honduran Government is that the description opposite No. 1765 has been altered to read “deer skins, raw” instead of “deer and elk skins”. The former nomenclature is that used in Schedule II of the trade agreement with Brazil,27 hence it must also be used in extending this concession to Honduras, which is, of course, a minor supplier of deer skins; and which, it is understood, does not export elk skins. This change should therefore be of no practical importance.
The Department is not delaying this instruction in order to prepare a tentative final Spanish translation of the agreement. It is believed that with the informal translations thus far furnished you that the Legation should be in a position to assist the Honduran Government in working out a definitive Spanish text of the agreement.[Page 748]
The Department trusts that with the submission of the attached tentative final draft you will be able to reach an agreement promptly with the Honduran Government on the questions still at issue and that preparations for signature of the agreement may be begun in the near future.
Very truly yours,