Foreign Relations of the United States Diplomatic Papers, 1936, The American Republics, Volume V

710.Peace Agenda/144: Telegram

The Chairman of the American Delegation to the Inter-American Conference for the Maintenance of Peace (Hull)³⁴ to the Acting Secretary of State

S. S. “American Legion,” November 11, 1936—6 p.m.
[Received November 12—4:05 a.m.³⁵]

3. For Mr. Duggan.³⁶ I am turning over in my mind the possibility of supporting at the Conference, preferably in conjunction with Argentina which originally broached the idea, some form of a proposal for a truce against any new obstacles to trade and any new discriminations in trade among the American Republics.³⁷ Following any understanding among ourselves in the determination of the exact form of any such proposal I should naturally be much guided by the attitudes and opinions of the representatives of the other countries. But on the basis of various preliminary drafts which I believe you have seen, the proposal as I grasp it, shapes up somewhat as follows: A truce against new barriers and new discriminations with the proviso that such truce shall apply only to products of which the American Republics which may abdicate [adhere to the] truce are suppliers to the extent of say 60 per cent of the total imports of that commodity by any adhering member of the truce.

For some such moderate action as this designed to keep the way open for the growth of trade among the American Republics I believe the time to be ready; and not to make some significant gesture at this time might be to dissipate the very considerable sense of common interest which has been created among those Republics. The rough statistical analysis that has been made by the Economic Adviser’s office of the trade aspects of this truce indicates the list of American imports on what basis we should be giving up our liberty of actions subject to the reservations and limitations to the truce which is in our minds. White, of the Economic Adviser’s Office, can supply a copy of this statistical analysis. Secretary Wallace, I am advised, has studied the proposal on the basis of this list and believes the proposal sound and beneficial. On the other hand I understand that Secretaries Roper and Draper of the Department of Commerce have doubts as to its soundness from the American point of view and that the Tariff Commission through Ryder and also Wayne Taylor of the Treasury share these doubts. What is sought is the considered opinion of these Departments after full consideration of all the circumstances and facts. Particularly this is based upon reports and the impression that the shortness of time available to these three Departments made it difficult for them to appreciate fully the many safeguards and reservations which I have in mind.

Therefore, will you please see Secretary Wallace at once and after reading the above explanation and statement to him ask him whether he would kindly talk with the Department of Commerce and the Tariff Commission and the Treasury and place the whole question thus fully before them explaining in particular the many ways in which our interests have been protected and our determination [right] reserved to take essential action. The draft seems to indicate an important step forward and when assimilated [adopted] would be an important expression of the common wish to develop trade while protecting each country against serious disturbance in its economic life and development.

For Secretary Wallace’s guidance it may be useful to summarize some of the more important reservations and limitations embodied in the draft.

1. The truce commitment would apply only to commodities of which participating countries supply to each other at least 50 per cent (alternately 60 per cent) of their imports of these commodities in the base period. This limits our commitment on the whole to products which we have purchased almost exclusively from Latin America—though in the case of a few commodities there is important outside competition in supplying the American market. Even if the commitment is based on the 50 per cent formula only additional 2 to 3 per cent of our total imports from the world as a whole would be affected over and above those included in the truce itself. Furthermore, it might be possible, although at this moment I am not sure it would be either necessary or desirable to include a clause similar to the third country clause in our trade agreements.

2. Statistical memoranda showing trade volume that might be affected by the truce show the maximum on the assumption that all American Republics participated in the truce. It is hence our maximum possible commitment.

3. Under a 50 per cent formula this country would be taking new action on somewhat less than 25 per cent of our total imports from Latin America.

4. A broad reservation has been drafted which provides for the right to modify the tariff treatment of any commodity if careful investigation shows a marked increase of imports injuring an established and efficient domestic industry. This important reservation draws upon the language of section 3–E of the K I. R. A.³⁸ and section 337 of the Tariff Act.³⁹ It is believed that this reservation, among other things, safeguards our right to go forward in justified cases under section 336 of the Tariff Act; virtually all recent cases of importance under section 336 would fall in that class. Ascertainment of all the pertinent facts would be handled by the Tariff Commission as the best equipped and most competent agency of the Government for this purpose presumably [in cooperation] with other Departments of the Government.

5. There is a specific reservation which states that the truce shall not prohibit the imposition by the Government of any of the participating countries of any restrictions in conjunction with governmental measures which might regulate or control the domestic production in [market] supply or prices of like domestic articles provided the quantitative restriction be calculated to maintain the previous relative place of imported and domestic supplies in the market.

6. The right to impose new tariffs offsetting any new or additional internal taxes is reserved.

7. Our right to take action under our antidumping and countervailing duty legislation is reserved.

8. The usual reservations as regard restrictions instituted on moral and humanitarian grounds designed to protect human, animal or plant life [and] relating to prison-made goods [and] to the enforcement of police [,] revenue or neutrality laws are included.

9. Similarly there is a reservation for action “necessitated by serious national emergencies.”

Since I am advised to my satisfaction that Secretary Wallace favors this proposal I shall be grateful if he will undertake to clear this through the three Departments above mentioned as promptly as possible. Please assist him in every way and call upon the other branches of the Department to do likewise. Keep me fully advised by cable of progress.

Hull

34. Mr. Hull sailed from New York on November 7.
35. Telegram in three sections.
36. Laurence Duggan, Chief of the Division of Latin American Affairs.
37. See Special Handbook for the Use of Delegates, p. 58.
38. National Industrial Recovery Act, approved June 16, 1933; 48 Stat. 196.
39. Tariff Act of 1930, approved June 17, 1930; 46 Stat. 590, 703.