611.1831/121: Telegram

The Secretary of State to the Minister in Costa Rica (Sack)

34. Your telegram No. 48, September 2, 3 p.m.

The proposed removal of the concession on lard would eliminate the most beneficial feature of the agreement for American agriculture and one which the Department is most desirous of retaining. Extension to the United States of the proposed rate of 50 centimos per kilo would have resulted in a loss of customs revenue to Costa Rica on the basis of United States export figures for the first 6 months of 1936 (16,750 pounds) of only 760 colones. According to your telegram No. 43 of August 24, 9 p.m.23 the 50 centimo rate in 1935’ kept total importations down to 489,000 kilograms, whereas in 1929 for example the United States alone shipped over one and one half million kilograms of lard to Costa Rica. The 50 centimo rate results in protection to Costa Rican lard producers of about 4 cents U.S. per pound, which would appear to be ample. Importations into Costa Rica are today so reduced the Government would lose only an insignificant amount of customs revenue by a restoration of the 1935 rate. These factors plus the consideration that this rate has been raised twice, from 40 to 60 centimos since Costa Rica agreed to negotiate a trade agreement with the United States, justify in the Department’s opinion, a reconsideration by the Costa Rican Government of its position on this subject. When this Government is prepared to guarantee duty free entry of Costa Rica’s chief exports to the United States the Department believes that Costa Rica should make a reasonable effort to treat major United States exports such as lard as generously as possible. Consideration of note 3 quoted in your telegram No. 49 of September 2, 3 p.m.23 will be deferred pending a clarification of this whole subject.
Consideration will be given to the elimination of item 122 (3) if you report that this is necessary to obtain more favorable action on lard.
The Department assumes from what you report that the text of the general provisions is identical with that used in the Guatemalan agreement, mutatis mutandis, except for Article XVI (Article XV of draft for Costa Rica), which should be omitted altogether. It is not clear however whether you are including Article V of the Guatemalan agreement. The Department would also prefer to omit the third paragraph of Article IX of the Guatemalan agreement.
Report exact differences between Schedule II you are now considering and those sent you under cover of Department’s instruction No. 299 of April 16, 1936.24
The Department will endeavor to obtain final approval at this end as quickly as possible following definite agreement on text satisfactory to the negotiators.
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