The Ambassador in Chile (Philip) to the Secretary of State

No. 86

Sir: I have the honor to refer to the Embassy’s despatch No. 78 of January 18, 1936,1 transmitting to the Department a copy of the Commercial Convention signed in Santiago on January 16th by the representatives of Chile and France.

This Convention is of particular importance to the United States because (Article 12) “the provisions of the present Agreement replace those of the modus vivendi of May 22, 1931,2 which will be denounced from the date on which the present Convention enters into effect.” With the termination of the modus vivendi between France and Chile will end the modus vivendi between the United States and Chile of September 28, 1931,3 providing most-favored-nation treatment for the commerce of the United States.

Article 11 of the Franco-Chilean Convention of January 16th reserves to the contracting parties the right to place the Convention into provisional application prior to formal exchange of ratifications, “in conformity with their respective legislation.” The French Minister has informed the Embassy that his Government intends so to apply the Convention prior to its ratification; while the Sub-Secretary for Commerce of the Chilean Foreign Office orally informed a member of my staff that his Government would place the new agreement into effect within the next week or ten days. The French Minister informs the Embassy that all that is necessary on the part of his Government to make the treaty provisionally effective is its publication in the Journal Officiel4 which he anticipates will be done within a week. The Chilean Government will invoke Article 2 of Law 5,142 of March 10, 1933, which empowers the President “to place into effect [Page 313] a commercial agreement not yet ratified, and only pending the ratification of such convention.” This law was extended by Law No. 5,298 of November 11, 1933, only to December 31, 1934;5 but is still being invoked by the Chilean Foreign Office and the Ministry of Finance as the legal basis for the application of commercial agreements ad referendum.

Señor García, the Sub-Secretary for Commerce, orally informed a member of the Embassy staff that the Foreign Office considers that the French Modus Vivendi of May 22, 1931, will not formally be terminated until ratifications of the new Franco-Chilean Commercial Convention are exchanged, irrespective of the fact that the Convention will shortly be placed into provisional application. He stated that the most-favored-nation treatment now enjoyed by the United States under its modus vivendi of September 28, 1931, will be continued to be enjoyed until the actual exchange of ratifications of the Franco-Chilean Convention of January 16, 1936. A memorandum6 of Señor García’s remarks to Mr. McClintock7 of the Embassy staff is enclosed.

The British Commercial Attaché was orally informed to the same effect by a member of the Foreign Office.

The French Minister expressed the opinion that once the Convention of January 16th is placed into provisional effect the modus vivendi of May 22, 1931, under the provisions of Article 12 of the Convention, will automatically be denounced. He remarked to a member of the Embassy staff, however, that if the Chileans chose to give another interpretation it was so much the better for the United States.

I would suggest to the Department that I be instructed formally to request of the Minister for Foreign Affairs a written confirmation of the oral statement of Señor García to the effect that the United States will continue to enjoy the benefits stipulated in its modus vivendi with Chile of September 28, 1931, until the French modus vivendi of May 22, 1931, is formally denounced by the ratification of the Commercial Convention of January 16, 1936.

A detailed analysis of the effect of the Franco-Chilean Commercial Convention with respect to the new rates of duty to be applied to the products of either country listed in the annexes to the Convention, is enclosed with this despatch, together with the interpretative comments of the Commercial Attaché.6

It was inferred from the French Minister’s references that there are secret protocols attached to the Convention of January 16th, and the Sub-Secretary of Commerce admitted to a member of my staff [Page 314] that such ancillary agreements do exist, but attempted to make the point that they were of no great importance and concerned only matters of interest to the French. Thus far it has not been possible to obtain additional information as to the nature of these secret agreements.

The Foreign Office seems to be willing to concede to the United States and Great Britain a continuation of their present status with reference to most-favored-nation treatment, on the basis of an indefinite extension of their respective modi vivendi signed in 1931, until such time as the French-Chilean Commercial Convention may be ratified. Obviously, this is a casual and uncertain basis upon which to rest the status of our trade with Chile: a basis thus far dependent only upon the oral assurances of the Foreign Office, and remaining subject to change over night. It would seem advisable to undertake discussions with the Minister for Foreign Affairs with a view to, by exchange of notes here or otherwise, placing upon a concrete, written basis the future policy with regard to most-favored-nation treatment which the Chilean Government proposes to follow vis-à-vis the United States.

Respectfully yours,

Hoffman Philip
  1. Not printed.
  2. League of Nations Treaty Series, Vol. cxxiv, p. 31.
  3. Foreign Relations, 1931, Vol. i, p. 926.
  4. The text was published in the Journal Officiel, February 16, 1936, p. 1962.
  5. Chile, Recopilación de leyes por order numérico, con indices por número, Ministerios y materias (Santiago, 1934) Vol. xx, p. 187.
  6. Not printed.
  7. Robert M. McClintock, Third Secretary.
  8. Not printed.