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

No. 66

Sir: I have the honor to acknowledge the receipt of the Department’s instruction No. 17 dated August 13, 1935 (File No. 633.113/10) reporting a rumor that the Uruguayan Government has increased customs duties on all articles imported from the United States by 30%, whereas for other countries the duties were raised by only 15%.

There has been no recent increase in customs duties, per se, in Uruguay. It is probable that the informing member of the American Manufacturers Export Association confused exchange restrictions with customs discrimination. A customs discrimination, much smaller than that reported to the Department, does, however, exist and was the subject of my despatch No. 34, dated June 28, 1935 (File No. 628). I have requested the Uruguayan Foreign Office to secure the removal of that discrimination.

It is true that the small customs discrimination to which reference is made above, plus unfavorable exchange restrictions, force importers of many American products to pay as much as 30% more for such products laid down in Montevideo than they would pay for similar products of other origin. The major part of that difference, however, [Page 956] is the result of having to remit against American invoices at an exchange rate higher than that permitted for products from other countries. In this connection, reference is made to an unnumbered report dated July 5, 1935, entitled “Uruguayan Import Permits Granted During Second Quarter of 1935” and to a Strictly Confidential despatch No. 647 dated May 23, 1935 entitled “Further Report on Position of American Trade under Uruguayan Import Quota System” from the Consulate General in Montevideo.8

The effect is to increase the cost of American products in Montevideo by 30% in some cases but the cause is, primarily, exchange discrimination. There is no other known customs discrimination in Uruguay than that which has already been made the subject of diplomatic correspondence seeking its early removal.

Respectfully yours,

Julius G. Lay
  1. Neither printed.